I am sometimes amazed where people get their advice from. I was at a seminar this week and was told, over coffee, by one of the businessmen there that he had “gone offshore”. I assume he had bought a holiday home and asked “anywhere nice?”. The chap corrected me and said that he had moved his offshore customers into a company based in one of the free-zone areas in Dubai.
The company was a shell and he merely siphoned sales through it and kept a large profit margin in Dubai. The businessman was based in the UK, as were all his business operations. The huge raft of anti-avoidance legislation in place in the UK to prevent this sort of thing was dismissed as “everyone’s doing it so why shouldn’t I?”.
On digging further it transpired that this chap had set it all up whilst on holiday. He felt he was forced to do this to minimise tax and, it transpired, keep up with a friend and fellow businessman who had done it. No UK advice had been sought. In the trade we call this “tax planning according to a bloke down the pub”. Another name for it is “it will work until they catch you”.
A family member (a distant relative by marriage and step relationship I hasten to add) once sounded me out about his great idea of having a Samoan company held by a Panamanian Trust to avoid UK tax.
Amazingly he had been taking advice from an American lawyer he had met in an internet chat-room. I pointed out that this sounded more like an advance fee fraud to me! I also pointed out to this chap that if he correctly arranged his affairs, then he and his wife could enjoy circa £80,000 of income at less than 20% tax. This must surely be better than no tax, but the serious risk of prosecution!
I suppose it is human nature. We don’t like to see someone doing something cleverer than us and we like to think we are smarter that the average man on the street. As the American billionaire Leona Helmsley once said “only the little people pay taxes”, but then she was convicted of tax evasion and left $12M in her will to a dog, so that proves it – she was just as barking as that bloke down the pub with his tax advice!Talk to Barnes Roffe today