Offshore Umbrella Company
An Offshore Umbrella Company, used by UBS for paying bankers’ bonuses, has been declared legal. It is a major blow for the taxman. HMRC had won a series of these court cases previously. It is likely that they will appeal the verdict. If this stays legal then lots of other offshore Umbrella Company schemes will be legal. It seems that in 2003 UBs paid its bonuses to its bankers as ‘restricted securities’. It paid them into an offshore Company in Jersey. Now it looks as if UBS could be in for a £50 million refund from the taxman.
The Government have targeted a number of these schemes in recent years. They have had some success. However, this is a big blow for them. The problem for the Governments is that once one of the schemes is declared legal then everyone can use it. Indeed the taxman just avoided defeat in a similar scheme that Deutsche Bank operated only on a technicality. Deutsch Bank will appeal that verdict.
Companies now have to report all tax avoidance schemes that they use to HMRC. However, it seems that they have become inundated with them. Even those that are legal are reported. HMRC have had to endure big cuts to their staff. The big exception to this is in the IR35 area. HMRC have been allowed to set up a large IR35 Compliance team. They have hired 36 Compliance Officers split into 3 teams. The Government, it seems, see IR35 as a potential big money bonanza for them. The Chancellor said at the last budget that they would extend IR35.
It looks as though many contractors will now use the offshore route. It looks as if some of them are completely legal.
For a selection of good Umbrella Companies check out Which Umbrella Company