[Article written by Martin Priest of Kinsella Solutions, an offshore umbrella solution for contractors.]
An article entitled "IT Contracts are Once Again Plentiful" was written by Barry Roback last month which suggested that individuals forget about contracting offshore.
The sentence “forget about contracting offshore” is very much an over simplification. Business is becoming increasingly international and “offshore” can mean anything which is not on onshore, i.e. established in a contractor’s home jurisdiction.
Certainly, there is an obligation that where a company employs personnel with UK duties PAYE and National Insurance be deducted and remitted to the UK Inland Revenue in accordance with legislation. In our view companies established outside of the United Kingdom should not shirk from their obligations in this regard. Normally such companies should appoint payroll agents and/or UK advisers in order to assist them to satisfy their UK tax obligations.
References to “offshore” can be misleading. In fact, offshore is anywhere outside of the UK and many “offshore” companies are in fact resident in another jurisdiction and pay local taxation.
Comment has also been made about UK money laundering regulations and contracting offshore really has nothing to do with this. Anti-money laundering regulations are directed at the source of the funds, i.e. in the case of a contractor these will originate from the end user of his services, often a very reputable company and often paid via an agency established in the UK. Money laundering would only result if any so called “offshore” arrangements made by the individual enabled him to receive payments offshore and furthermore that individual did not declare the payments that he had received offshore on his UK tax return. If arrangements are constructed in such a way that all appropriate amounts are declared on an individuals tax return then no tax evasion or money laundering would take place.
It is interesting to note that whilst “new” money laundering regulations have been introduced in the UK this year, equivalent regulations have existed in many of these so called “offshore” jurisdictions for some time.