Offshore Limited Umbrella Company - Legal?

scaredofdebt

Hi,
I've recently started working as a contractor and have been advised by the agency that I can reduce my tax burden by operating under a limited umbrella company.  I've done some more research into this and it appears you can actually operate under an offshore limited company - of course the websites claim it's perfectly legal but I am sceptical. Anyone got any experience of this?
I've only ever been PAYE so this is all new to me.
Thanks,
David

Jeremy535897

Some information here:
https://www.contracteye.co.uk/umbrella-schemes-compliance-myths.shtml

DoctorStrange

If you're unsure on your IR35 status and don't have tax investigation insurance, then please avoid every umbrella offering "compliant solutions" to minimise tax. 

You may find yourself in an unholy mess with these schemes, and it'll be years from now before the chickens come home to roost.

csgohan4

important to do your own research, I would suggest getting an accountant to double check. I too have heard about creating off short ltd companies as well and could be tax efficient. But I want to be able to sleep at night and would rather not get a HMRC investigation letter through the post

How lucky do you feel? Tax investigation insurance, doesn't absolve you of the tax that needs owing plus interest

Dead_keen

Ask these guys: https://www.contractoruk.com/forums/hmrc-scheme-enquiries/
And read a few threads as to how bad it will get if you did...

Grumpy_chap

Some of the off-shore umbrella companies operated the mechanism that gave rise to the "Loan Charge" - a quite frightening place you would not want to be.  You do not give enough information as to whether the arrangement you have seen works in that way or not.

There are perfectly legitimate Umbrella Company operations, so do your own research or engage an Accountant to provide advice (and the options between agency PAYE, umbrella company or own Ltd Co.)  If you are down to one or two Umbrella Companies, you can always put their names here for comment.  Often an Agency will only have a specific selection of umbrella companies they are willing to work with based on them doing some due diligence to protect themselves.

laticsforlife

Worth also reading Spotlight 33
It is usually the case that initially the tax avoidance is from a PAYE perspective - in other words the issue arises with your 'employer' the umbrella Company.  But if recovery from them fails (over the next 6 years or so!), then expect HMRC to come back after it from you for the tax and NIC avoided, plus interest and potentially penalties.

How much stress would you like to have hanging over you for years to come as to whether you're going to end up with a massive tax bill - and also no pension as you aren't contributing (although they may split the payment so you pay the minimum in).

There's 100% certainty that these schemes do not (eventually) work, but it takes many years to take them through the Courts system up to the point of recovering the lost taxes (to pay for running the NHS for example).  By then the promoter has run off with his 10% (or whatever), leaving you to sort out the undoubted debt you now owe.