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Or, offshore companies can buy things like property then rent them back to you incredibly cheaply.
Sure, and they don't even need to charge any rent at all, but at least the company has to pay stamp duty on that purchase (hence the recent hike in stamp duty for property purchases by offshore companies). But the point remains that if the property is subsequently sold the proceeds remain offshore. It doesn't help get any of the money back onshore, and now there's more of it.
To do that you (gross generalisation follows) set up a UK company to buy the property using a loan from the offshore company or, more usually, a bank that uses the offshore company's assets as a guarantee for the loan, and then claim tax relief on the interest payments (as the company is making a loss having to make those payments). That tax relief offsets profits made from another arm of the business (e.g. you make zero net profit) and so your other business makes its profit tax free. You repay the loan using this tax free money and, eventually, the loan is paid off and the property is now owned wholly by the UK company. But this doesn't move any money from offshore to onshore it's merely making a profitable business pay not tax, so bonus points for the offshore company paying some sort of licensing fee to the UK company for some reason (e.g. some kind of franchise deal) so that the income of the UK company actually comes from the offshore company. That way you get the money flowing from the offshore company to the UK company but no tax being liable.
[ What is described above is pretty much outlawed if implemented directly, which is why they end up having endless groups of companies that slosh the money around so that it's virtually impossible to unpick things given the fungible nature of money. ]
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well explained, here lend us a fiver and i'll buy you a drink..
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I can understand why self-employed individuals sometimes play the system a bit/break the law: You have to pay taxes, yet you get no unemployment benefits.
And he/she passes on the savings to you, rather than grabbing as much as possible and giving the tax payer nothing back.
Doesn't make it legal obv.
It annoys me more when people get underpaid by their bosses who pay no tax, and don't give them benefits from tax they saved.
My employer uses HMRC real time monitoring so I'm stuffed :P
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Springsteen cancels North Carolina concert over 'anti-gay' law
http://www.bbc.co.uk/news/world-us-canada-36000905Great protest going on across the pond. Chapeau the Boss
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On the theme of overseas companies and property, this is a map of all property owned by overseas companies in the UK.
http://www.private-eye.co.uk/registry -
• #39936
Has this dude just declared class war?
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• #39937
Incredibly, Osbourne even wants to sell the Land Registry Office which keeps this data. Potentially meaning a) this too could be sold to an overseas company and b) it could become (as a private company) exempt from FOIA requests that allow such databases to be constructed.
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• #39939
Time to invest in roller blinds?
Hmmm... What are the tax laws like in Venice?
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Residential property is actually one area where it is very difficult to avoid UK tax, for individuals at least, because there have been big changes to the law over about the last 8 years.
If the property is residential and not commercially let to someone unconnected with the structure, the UK company will pay an annual tax (ATED) plus capital gains tax on the sale of the property (which would not be applicable if the property was owned by a person who used the property as their main home).
If the property is let commercially, the UK company would pay income tax on the net rent. The interest payments to the offshore company would come from a UK company and so would have a UK source and would therefore suffer UK tax. If the occupier of the property is UK resident, they might also be liable to pay income tax on the benefit in kind they have from low rent occupation.
There will be inheritance tax on the value of the UK company when the owner dies. if the owner of the offshore company is UK domiciled, there will be inheritance tax on the offshore company when he dies. The potential tax gap for Inheritance tax comes if the owner of the offshore company is not domiciled as the value in the offshore company would then not be inheritance-taxable. However, it is possible this would breach the general anti-avoidance rule and may also be stopped by new laws due in 2017. If the offshore company is owned by the non-dom and what it has lent to the UK company consists of non-UK income or capital gains made by the company or the non-dom, that money would be fully taxable when it is lent to the UK company to buy the house.
The UK company will also have to publish details of who its beneficial owner is.
The problem is that this is what the law says and it relies on self-assessment. If people lie, the tax doesn't get paid. Offshore secrecy facilitates the lies by minimising the risk of being found out. Most offshore jurisdictions have laws prohibiting facilitation of tax evasion but enforcement is inconsistent (putting it mildly).
This may change as a result of the common reporting standard which about 90 countries have signed up to and means that financial institutions will have to report on people who have accounts with them who are resident in another country and full cross-border exchanges of info between tax authorities in different countries automatically. Again though, it will rely on the honesty and competence of the institutions and the tax authorities.
Having written this, I realise I don't know what point I am making except that the tax code itself, apart from being ridiculously over complicated, isn't the problem, it's cross-border enforcement and balancing transparency with privacy (I have sympathy with people from kidnappy places like Venezuela worrying about who is going to get hold of the details of their financial affairs).
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Avoidance is not evasion. Avoision is not a word.
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• #39946
a) Good for you b) Please keep updates coming if there is anything to update
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Shame. I'd be there if I weren't working.
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Zac Goldsmith to offer you cash off your Council Tax for dobbing in all of the extremists you can find on here - http://www.politics.co.uk/news/2016/04/04/zac-goldsmith-to-recruit-cyber-armyto-monitor-online-extremi
Greenbank
rive_gauche
kaiseroscar
hoefla
MrDrem
JWestland
almac68
aggi
Mr_Sworld
mashton
deleted
skydancer
starfish&coffee
Dooks-Fatberg
Emyr
andyp-
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@Platini
Marina Hyde's piece is deliciously acerbic
http://www.theguardian.com/commentisfree/2016/apr/08/david-cameron-tax-dodging-cover-up-labour
I also think she makes a good point that Labour has a stone-throwing/glass house problem lurking in Connaught Square.