Restructure of Ltd in face of budget changes

[Felix22]

A contractor mate has told me they've changed their operations from standard PSC Ltd to a part-umbrella company part-limited co, running out of the Isle of Man as this provides a tax break. Apparently will provide 80-83% tax efficiency.

Wondered if anyone else has heard of this or restructured in light of the upcoming changes?

[dx4100]

Pass your mate this link as he is probably going to need it soon...

HMRC Scheme Enquiries

[northernladuk]

Sounds like a disaster waiting to happen. Using other countries tax breaks in the current climate isn't a good idea surely?

Did he say it was QC approved because it certainly sounds too good to be true and a convoluted tax arrangement?

Wouldn't touch it with a 10ft barge pole.

[pr1]

A contractor mate has told me they've changed their operations from standard PSC Ltd to a part-umbrella company part-limited co, running out of the Isle of Man as this provides a tax break. Apparently will provide 80-83% tax efficiency.

Wondered if anyone else has heard of this or restructured in light of the upcoming changes?

[SueEllen]

A contractor mate has told me they've changed their operations from standard PSC Ltd to a part-umbrella company part-limited co, running out of the Isle of Man as this provides a tax break. Apparently will provide 80-83% tax efficiency.

Wondered if anyone else has heard of this or restructured in light of the upcoming changes?

Tell your mate that in around 10 years he may lose his house and be facing a divorce.

[pr1]

Tell your mate that in around 10 years he may lose his house and be facing a divorce.

And HMRC might catch up with him!

[SlipTheJab]

Pass your mate this link as he is probably going to need it soon...

HMRC Scheme Enquiries

Along with a large jar of lube...

[Felix22]

Using other countries tax breaks in the current climate isn't a good idea surely?

Indeed!

Did he say it was QC approved because it certainly sounds too good to be true and a convoluted tax arrangement?

Wouldn't touch it with a 10ft barge pole.

If it was anyone else I'd say the same, but this guy is an experienced contractor - been in the game 10+ years and generally on most matters I'd trust his opinion.
Hence my query here - it doesn't sound right to me, but on the other hand I find it hard to believe as a seasoned contractor he would fall for a scam.

[SimonMac]

A contractor mate has told me they've changed their operations from standard PSC Ltd to a part-umbrella company part-limited co, running out of the Isle of Man as this provides a tax break. Apparently will provide 80-83% tax efficiency.

Wondered if anyone else has heard of this or restructured in light of the upcoming changes?

[northernladuk]

Ask him for his opinions on this....

https://www.gov.uk/government/public...-and-avoidance

Dealing with tax avoidance schemes

We are designing legislation that minimises the scope for tax avoidance.

The government has introduced a General Anti-Abuse Rule (GAAR), aimed at deterring and preventing artificial and abusive tax avoidance schemes.

We will also introduce new measures to deal with tax advisers who sell contrived and aggressive tax avoidance schemes. The government has announced it will consult on proposals to introduce significant new information disclosure and penalty powers, to make it more difficult for the promoters of abusive schemes to continue to market them in the future.

We are using settlement opportunities to encourage users of avoidance schemes to agree their tax position with us, and investing in additional resource to accelerate litigation for those who do not settle.

We are making better use of anti-avoidance communications to influence the behaviour of taxpayers and promoters of avoidance schemes. We are also improving the quality of information available on avoidance to help taxpayers realise the potential downsides and risks.

and hiding it in the IOM?? Same document...

Increasing our ability to identify offshore tax evasion and avoidance

We are working more closely with other tax administrations to prevent offshore evasion.

At the G8 Summit in June 2013, the UK reached a major new agreement with G8 member states to move to establish the automatic exchange of information between tax authorities. G8 countries agreed to work with the OECD to develop a model for this.

This builds on the prior commitment made by France, Germany, Italy, Spain and the UK to pilot the automatic exchange of tax information. This initiative has since been joined by 12 other EU Member States and Mexico and Norway.

The UK Crown Dependencies and Overseas Territories (Guernsey, the Isle of Man, Jersey , the Cayman Islands, Anguilla, Bermuda, the British Virgin Islands, Montserrat, Gibraltar and the Turks and Caicos Islands) have also joined this initiative, agreeing to automatically exchange information about accounts held in those jurisdictions with the UK and others.

We have also set up a new centre of excellence within HMRC to bring together and enhance our expertise in dealing with offshore evasion. The team will look at how HMRC can best use data to identify offshore tax evasion.

Also tell him to have a read of this...

https://www.gov.uk/government/upload...2015_AD_V6.pdf

Particularly from page 9 onwards which explains what GAAR applies to. There are many comments such as the following, which I would say fits your mates situation to a tee... and there are lot more examples, all which sound like they were written with this scheme in mind.

The GAAR applies to ’tax arrangements’ which are ’abusive’. In broad terms a tax arrangement is any arrangement which, viewed objectively, has the obtaining of a tax advantage as its main purpose or one of its main purposes. ’Tax advantage’ in this context is also broadly defined.

Let him fill his boots, crack a beer and wait until HMRC pop and ruin his life.