offshore personal companies

offshore personal companies

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A cilent of mine has been speaking to someone in his line of work who is going to set up a Hong Kong company and a UK agency and remit the income back and forth between UK and Hong Kong and only pay tax on 5% or some sort of overly complicated thing!

Anyone any experience in this kind of nonsense?  I hate it!

Replies (7)

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By Captainblack
03rd Jan 2013 13:52

Black Fingernail?

With all the focus on 'schemes' and false commercial structures lately it seems likely to me that HMRC will etch a 'black fingernail' on your client's file and put it to one side for special scrutiny. Unfortunately, the side effect of this is that they may associate you with the arrangements, which is hardly helpful. I have no experience of the scheme (to answer your question) but still keep having these ideas sold to me. IMO the gain is not worth the potential pain.

Captain

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By imbs
03rd Jan 2013 20:19

Thanks captain
My thoughts exactly. HMRC are all over this sort of stuff. Id like a technical reason to give him why it's a bad idea if anyone has any thoughts...?

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By gbuckell
04th Jan 2013 10:47

Sham

It is difficult to comment without knowing all the details. However, unless there is a genuine contribution to the business from the foreign operation, the setup smacks of a sham. An accountant and a barrister went to prison over such a scheme some 20 years ago. See http://www.thelawyer.com/barrister-convicted-of-tax-fraud/94673.article. May be there is genuine commercial substance to this set up but I would look at it very closely.

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By imbs
04th Jan 2013 10:52

Thanks Sham

I'll try to find the time to give it more scrutiny - I will probably have more questions to post here!

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Replying to lionofludesch:
Red Leader
By Red Leader
04th Jan 2013 11:58

forget technical

Don't waste your time trying to analyse the scheme.

My approach to clients who ask for my opinion on these types of schemes is, in no particular order:

a) I don't get involved in offshore companies.

b) Do you Mr Client want to put your head above the parapet and wave a red rag at HMRC (to mix a couple of metaphors). It's like saying "come and get me, copper".

c) You will get a tax enquiry.

d) Legislation is likely to be brought in to make the scheme ineffective.

This usually dampens any stupid enthusiasm they have for these chimeras.

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By frustratedwithhmrc
04th Jan 2013 14:09

Had this a couple of times...

Just make it clear to the client that as a UK resident, working in the UK he gets lots of benefits from operating as a UK Limited Company, while it is true that he could setup and operate through an offshore vehicle, this would inevitably be reported to / discovered by HMRC at which point he would be subject to a severe and exacting inquiry, payment of back-taxes, penalties and interest on the basis that this structure was artificial and purely existed to illegally evade tax.

Explain to your client that if he wishes to pursue this form of artificial business operation then you would be obliged to issue him with a disengagement letter and ask him to find another accountant to undertake his fraudulent tax evasion with.

If he persists, issue a disengagement letter on the basis of unreasonable behaviour and notify SOCA of client intention (although not knowingly committed) to evade tax.

Clients are often idiots and have to be dealt with harshly, life is just too short.

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By imbs
07th Jan 2013 10:38

Thanks everyone

It is nice to be armed with some verbal comeback!  Very much appreciated.

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