PCG, the association for contractors and freelancers, has condemned artificial avoidance schemes following a recent case won by HMRC.
The scheme by Consulting Overseas Limited offered a remuneration package to independent contractors that would save them huge amounts of income tax and National Insurance contributions. To avoid paying tax, contractors signed up as employees of Sandfield Consultants Ltd, an Isle of Man company, and agreed to receive roughly two thirds of their income as loans in Romanian lei, Byelorussian roubles or Uzbekistani soums. They then entered into currency trades that were supposed to turn these earnings into non-taxable foreign exchange gains.
PCG understands that HMRC are increasing their activity in this area and is seeking a meeting with senior officials to clarify their strategy. Tax payers who made use of schemes similar to the one offered by Consulting Overseas Limited should be alerted to the possibility that they may be contacted by HMRC.
To read more of the PCG article please click here.
At 123 Contracting we have always believed in legitimate prudent tax planning that last the course and is not blatant artificial tax avoidance. If it sounds too good to be true "Take home 98% of your contract" it simply is! If you have ever used one of these schemes before do not bury your head in the sand, get in touch today for advice on your personal situation.