Umbrella Company Contractors Be Wary Of Offshore Tax Schemes
The government has made it perfectly clear that they will continue to clamp down on schemes that promote tax evasion
. umbrella company contractors and freelancers that find such schemes attractive should be fully aware of the dangers of using these schemes.
Many schemes claim that they are HMRC approved just because they have been issues a reference number, although a spokesperson from the Inland Revenue stated that a scheme reference number does not mean that the scheme is fully compliant and approved by HMRC.
HMRC have stated that one area they will be looking at is avoidance and evasion. They have even stated that a dedicated team of investigators will be drummed together to catch those scamming the system.
Their announcements could signal intentions to put a stop to contractors using solutions such as EBTs where the ultimate aim is to pay as little tax as possible. The problem is, if these offshore schemes go into administration, the so-called tax free loans issued to the contractors as a way of maximising their net earnings could in fact be re-called by the administrators, leaving contractors to pay back thousands.
There are a number of things contract, freelance and temporary workers should look out for;
Schemes that sound too good to be true
Confidentiality or secrecy statements
The UK Government is certainly looking to increase their tax revenues by negotiating with certain tax havens in an attempt to tax those that have assets in secret accounts.
A recently struck banking transparency arrangement with Liechtenstein seems to be working very well and delivering more than expected. Similar arrangements could be set up with other tax havens. If all the deals are concluded successfully, the government estimates it will raise 10bn in the coming years.
There are other tax efficient alternatives other than unscrupulous solutions like EBTs, such as using a PAYE umbrella company. Danbros Umbrella Company is recognised by the Sunday Times Fast track 100 as one of the fastest growing private companies in the UK and is rated as one of the industrys best by umbrelladetective.com.