Offshore Umbrella Company
The Offshore Umbrella Company market may get a boost from the latest IR35 news. According to Bloomsbury Publishing the Government has more than doubled its IR35 investigations. HMRC made 59 investigations Last year. It made 23 the year before. It also took in £1.25m from those investigations. That compares with £129,000 the year before. The purpose doesn’t seem to be to get more from IR35 though. Those sums are still a tiny part of the tax take. It looks like the plan is to get contractors out of Limited Companies. Umbrella Companies seem to be the Governments favourite vehicle for contractors. The reason is that they take 10 grand a year more in tax from Onshore Umbrella Company contractors than they do for Limited Company contractors. They take this in tax and National Insurance contributions as opposed to dividends.
It looks as though the Government is trying to herd contractors into brollies. Should contractors choose an Offshore version or an Onshore one though?
Should contractors take a leaf out of the toffs play book? The Government obviously want contractors to go into Onshore Umbrella Companies. Could the Government and HMRC lose out if more and more contractors took the Offshore route? They would be hoist by their own petard. Chancellor Osborne has a £4.5m offshore trust. David Cameron’s father Ian helped build the family fortune by using offshore trusts. Cameron’s father-in-law Lord Astor uses them too. The Tory Party’s biggest donor Lord Ashcroft uses them too.
This is supposed to be the toffs’ little secret. The little people should pay PAYE. However, the Government are obviously hoping that contractors don’t follow in their footsteps and use the offshore umbrella company route. However, more and more contractors may follow this route. They will find that the door is wide open as the toff’s hadn’t expected the plebs to come to the party.
For a selection of good Umbrella Companies check out Which Umbrella Company