Offshore arrangements for IT Contractors

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Offshore arrangements for IT Contractors

Posted Jul 30, 2008

Recently, I came across an article entitled "offshore" arrangements for Contractors - should you be worried? (PDF)

In the article the "you" as referred to is directed at recruitment agencies and the content of the article relates to recruitment agencies ensuring that they are "safe" with regards to the "Debt Transfer" rules with HMRC that became effective January this year when "recommending" offshore schemes to their contractors.

The article suggests that some "offshore" scheme providers may not be divulging the true nature and operational structure of their scheme and recommends that recruitment agencies do not receive rewards either in money or gifts for referrals of clients to these schemes thus exposing themselves to the risk of the debt transfer rules.

From the perspective of a freelancer of professional contractor, we cannot stress enough the importance of making yourself fully aware of the set up and operation of any such scheme that you are involved with or considering.

Remember:

The debt transfer rules were legislated to empower HMRC to seek redress for any unpaid debts from third parties.

However, in many cases you are the first port of call; on top of the list BEFORE any third party.

We recommend that you seek professional and or legal advice before using any "offshore" scheme.

Ensure you are fully aware of all facts and that the scheme provider is fully compliant with all legislation.

Remember that in most of these schemes that we have seen the scheme provider earns their fees whether you, the tax payer, get into a prolonged tax investigation with HMRC, and whether you win or lose any investigation. You could perhaps ask yourself who will gain the most out of the arrangement, and who carries the risk of the arrangement not working out as promised.

If you are in doubt... Don't do it!

As the tax payer you are responsible for your actions, even if you have acted on the advice of others.

About the Author

Written by Phil Richards
Blevins Franks Chartered Accountants Ltd

All content ©Contract Eye Ltd. Protected by Copyscape. Please scroll down for related articles.

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