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British Banks Go Offshore, So Why Shouldn't You Follow says Lee Byers?
British Banks Go Offshore, So Why Shouldn't You Follow says Lee Byers
?British banks were bailed out to the tune of billions of pounds worth of taxpayers' hard earned revenue and the bail out has arguably left the country bankrupt. The new government coalition (the ConDems!) are doing what they can to fill the black hole in the economy, but it's akin to shedding tears to fill an ocean.
The latest news is that they're thinking of levying a charge against trades done by British listed banks in an effort to raise billions of pounds worth of tax income but guess what, the British banks are now all set to go offshore to avoid as much of this charge as is possible. So if banks can go offshore, why shouldn't you follow?
The fact of the matter is, the banks that are going to be able to best avoid this charge have trading books centred elsewhere in the world so if you're an expatriate whose life is centred elsewhere in the world, you too can potentially go offshore to legitimately avoid taxation in the UK. So, if the banks are doing it, why aren't you? In this report we look at the moral and legal implications of going offshore
How Can the Banks Go Offshore?
On a practical level, the banks can go offshore in this instance because they have trading books elsewhere, and they can run taxable trades through these offshore books. Take HSBC as an example HSBC did not receive any money from the government when all the other banks almost went bankrupt. Now, the government is about to penalise it for the failings of all the other banks by attempting to place a levy against certain aspects of its trading activity.
However, HSBC has a significant presence in Hong Kong and analysts are predicting that it will instead move - on paper only perhaps - much of its trading activity to this offshore centre instead.
So, in a practical sense HSBC can do this because it already has a percentage of its business located overseas and offshore i.e., outside the British tax net. In a moral sense perhaps HSBC doesn't feel it should contribute to the coffers when it never drew from them in the first place?
As for the other banks which were bailed out and which now will obviously seek to take the same evasive action as HSBC if they can, in a moral sense there is no justification for their action unless you're a shareholder of the bank.
How Can You Go Offshore?
If you no longer live in the UK and you are permanently resident overseas, you are already effectively offshoreand your tax affair should reflect your status. In other words, once you become resident in a new nation you generally fall under the tax rules of that country. However, attention needs to be paid to the fact that the UK tax authorities still have an interest in you until you have been permanently abroad for 183 days in any one tax year and you must make sure you don't spend too much time to-ing and fro-ing from Britain so that you come back onshore.
Next you need to understand the tax rules in your new nation. For example, in some countries if you're only' a resident and you're not a domiciled citizen, (i.e., you were not born and raised in that country), you only pay tax on money you earn in that country or remit to it.
This can mean that if you have money in savings and investments, you can keep that cash outside the nation and legitimately not have to pay any tax on it. To find out how you can potentially save tax on a purely practical level, you are best off speaking to an offshore wealth manager who will be able to assess your tax and personal status and advise you accordingly.
To decide whether avoiding tax is acceptable to you on a moral basis is a personal decision however, why should anyone pay tax they do not owe? And all we are talking about here is understanding your tax position fully, and then working within the boundaries of your responsibilities so that you do not evade a penny but you do take full advantage of any legitimate paths open to you for taxation enhancement.