The Gabem Umbrella Companies Blog:
Home of Umbrella Company Gossip Online
8th August 2008: Offshore company setups and a guest blogger
Here we have a guest post from Mr Michael Jackson (see what did I tell you) he weighs in from the darkest depths of the customer services team, is currently the office's current Health and Safety Champion, and someone you may have spoken to if you've had the misfortune of having to claim under Gabem's accident insurance (we hope you recovered quickly).
He's here to warn you of the dangers of offshore setups:
Since the inception of the MSC legislation in 2007, temporary & contract workers have found themselves having to shop around for the best offers from companies touting themselves as having the answer to beating or avoiding the new legislation. A simple search in any internet engine will return you page upon page of options ranging from working as a director of your own company to Umbrella offerings.
Most attention grabbing though are listings from companies claiming to be able to offer you a legitimate, compliant service allowing you to take home up to 85-90% of your weekly wage by employing you through a company in somewhere like the Isle of Man. Why settle for PAYE when these companies can legally allow you to take home more? It almost sounds too good to be true..Usually because it is.
Companies offering offshore companies set up in the Isle of Man aren't the answer to the MSC legislation and using them is a big gamble. They work similarly to the old MSC format where you are paid as a minimum wage salaried employee and the remainder of your earnings treated as profit shares and because of the Isle of Man's unique tax setup you only pay around 10% in tax. Which sounds like a great deal right? Wrong.
If you are living in the UK for more than 6 months a year your earnings are still liable for UK Income tax and National Insurance to be paid on your earnings at the end of the year and if you have only paid 10% in tax and a small amount in NI then you can look forward to a bigger bill than a 50 foot duck. And don't forget that the tax man can go back up to 5 years and demand interest on your unpaid tax as well as hitting you with fines for each year you've not declared your earnings correctly. Which all adds up to a huge tax headache for you and zero comeback for the company.
- Michael Jackson
Hopefully we'll be hearing more from Mike in the future.
If you want to get in touch with Mike or myself you can here, thanks for reading and have a great weekend.
Hugo
08/08/2008
