Tax avoidance through offshore umbrella companies 'is illegal'

Posted on 4 December 2008

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Contractors should not use offshore umbrella companies to avoid tax payments, it has been claimed.

Speaking to Shout 99, contractor accounting firm Danbro has highlighted the fact that the Finance Act 2008 outlawed this practice.

As such, freelancers cannot take advantage of dual tax treaties, for example those which exists with the Isle of Man, in order to receive tax-free payments, it is claimed.

The legislation applies to income arising on or since March 12th this year, according to the news provider.

Danbro has warned that strict financial penalties could be enforced for freelancers who continue to circumnavigate tax laws through the use of offshore tax havens.

The firm claims that fines of up to 100 per cent of the unpaid tax amount can be ordered by Her Majesty's Revenue & Customs under the Finance Act.

Last week, the government chose not to legislate on the issue of income shifting within family businesses, although ministers have warned that they may consider ruling on the practice at a later date.

Category: Tax & Legislation News

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