Offshore companies – Sanzar, Flemming Lang and Montpelier
Special update January 2010 - Offshore tax scheme warning - Royal Court of Justice ruling
If you have once used or are thinking of using an offshore tax scheme as a way of avoiding UK tax please read the note below. Thursday 28 January at 9:30am the Royal Court of Justice ruled the retrospective effect of BN66 is not unlawful. Which in plain English means that HM Revenue and Customs can now go back in time and retrospectively apply a piece of tax legislation which will affect thousands of contractors who either once used or are still using an offshore scheme/company as a way to avoid paying UK taxes.
HMRC can now go back as far as 1987 (which is when BN66 was imposed), so even if a contractor used a scheme in 1987 for one day or one year, they may now have to pay both fines and backdated taxes.
This news further supports the fact that contractors should think very carefully before using offshore schemes as a way of avoiding paying UK taxes.
Basically if you live in the UK, work in the UK, get paid for work you do in the UK, there is no way and has never been any way of avoiding UK taxes. Working through your own UK limited company is and has always been the most tax efficient way of working legally.
If you have any questions about working through your own legitimate UK limited company, as many hundreds of thousands of contractors already do and many millions of other UK limited companies do, please don’t hesitate to call 0500 152 500 / 01442 275789 or email: Jaime.thorpe@sjdaccountancy.com. End of special update.
Offshore tax schemes
So why would you use an Offshore umbrella company like Sanzar, Flemming Lang, Montpelier or one of the many companies that provide offshore tax schemes? With most of these companies guaranteeing contractors 80-85% of their contract value, it’s hard to see why contractors wouldn’t use an offshore scheme!.
These companies work by getting your contract income paid outside the UK so you can avoid paying UK taxes. Payments are typically made via loans, trusts, expenses and dividends. They nearly always involve exotic and convoluted tax planning schemes. Fees are usually high, which is fair enough as I’m sure they have some high paid tax specialists trying to run rings around the mighty HMRC.
Now if you didn’t live in the UK or even work in the UK, I’m sure these schemes will be fine. However, my guess is you ‘do’ live and ‘do’ work in the UK which will mean you will have to pay tax as if you lived and worked in the UK (death and taxes as the old saying goes). Now some companies will tell you all sorts of things about government approved scheme’s, they may even show you illustrations, send you the tax legislation that shows just how legal it is, they might even put you in contact with an impartial tax team who will back it all up.
Our advice is simple - get all the information and the have a chat with your local tax office. If it’s truly a scheme that the government approves you will have nothing to fear.
Alternatively, you could just trade through your own limited company which millions of people do quite safely. And I very much doubt the Government will deem this to be illegal, after all what’s the alternative?
Click the link for more information about Offshore limited company schemes EBT and Offshore invoicing and here details on BN66 Double Taxation Treaty Abuse offshore schemes.
If you would like to understand more about how to work through your own limited company and what you could be taking home, please visit the following pages:
Two-minute guide to contracting through your own limited company
Take home pay through a limited company
If you'd like to speak to one of our experts, call us on 0500 152 500 / 01442 275789 or email jaime.thorpe@sjdaccountancy.com.
About SJD Accountancy
SJD Accountancy are the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 11,000 clients.
We are the only National specialist firm of accountants with offices in all major UK cities so you’ll never be far from your accountant. SJD also have more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATII, ATT, ACCA, CA, ACA, FCCA, ACMA. You’ll also be pleased to know that we are one of the lowest priced as well.
SJD have also won every relevant industry award possible, including:
- Best Contractor Accountants - Contractor UK 2011 - 2007
- Accountant of the Year - The British Accountancy Awards 2011
- Best Professional Team of the Year - UK Customer Experience Award 2011
- Customer Commitment Award - Institute of Customer Service 2011
- National Chamber of Commerce Award 2010
- Medium firm of the Year - Finalist Accountancy Age 2010
- Excellence in Customer Service - Finalists National Customer Service Awards 2009
- Sunday Times Best Small Companies - Award 2009 - 2007
- Small firm of the Year - Accountancy Age 2007 & 2004 and finalists in 2010 and all years since 2003
- Deemed PCG accredited accountants and fully MSC compliant
We offer all clients:
Free face-to-face meetings. This is another unique service, only SJD offers free face to face meetings - tax is complicated and sometimes only a meeting will do.
Unlimited access to your own dedicated accountant. No call centres, no outsourcing, no automated call handling. Simply telephone, e-mail or meet your own dedicated accountant face to face.
Money back service guarantee. All your telephone calls and e-mails will be answered the same day or we will refund your monthly fee's.
Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market.
All inclusive low cost monthly package which includes completion of accounts, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, unlimited access to your accountant and all company returns.
All this for a fixed monthly fee of £110 plus VAT, which is one of the lowest prices in the market. And most importantly, in a recent survey 98% of our clients rated SJD as 'better than other accountants' - we are working hard to convince the other 2%!
If you have any question about contracting or would like any further advice please either contact your SJD Accountant or call our new client services helpdesk on 0500 152500 / 01442 275789 or email: michelle.turbutt@sjdaccountancy.com.
Appoint SJD Accountancy and never worry about your tax or accountancy affairs again!
You may also find the following pages, guides and case studies useful:
Take home pay calculator - How much could you be taking home
Contractor FAQ - All your frequently asked questions and their answers
First time Contracting or Freelancing? - A summary of the alternatives along with pros and cons
Choosing an accountant - For a full review
Step-by-step Guide to Contracting - Download a FREE copy of our guide
Limited or Umbrella? Can't decide? - We help you decide which is best for you
Guide to Contracting - All the best guides to contracting in one place
Expenses Guide - Know exactly what you can claim
Umbrella company guide - Everything you ever wanted to know about umbrella company services
IR35 Guide - A great plain English guide to IR35.
