Tax return done? Nah, I've offshored myself

Never mind trying to minimise your tax liability - it's surprisingly easy just to take yourself completely offshore and pay no tax at all, says Willard Foxton.

As I'm self-employed, I realised with some horror the other day that my tax return was due soon. In journalism, every year at this time of year, there's a frantic scrabble between friends seeking advice from one another - should you go on schedule D? Should you VAT register? Where did I put that carrier bag of moth-eaten and crumpled receipts? Can I claim back that strip bar we were "undercover" in?

In previous years, I've often come in for mockery from my mates, because I don't even claim VAT back. I don't have a service company, like 90 per cent of freelancers and many politicians. I just declare my full income, and then pay tax on it. Why? Well... I think that's the moral thing to do. Unpopular view, I realise. Maybe it makes me an idiot. However, I don't feel like a company, or an entrepreneur taking a risk, in need of tax breaks. I'm not going to get on my high horse about it - it's my decision. That said, at global champagne and lobster fest Davos, David Cameron said sensible tax planning is OK - which of course poses the question, where do you draw the line?

I've always though, if I was going to do the tax-dodging thing, I wouldn't do it in a mealy-mouthed, Ken-Livingstone-style, by setting up a company and filtering all my expenses through it. I'd go the full-bore Amazon/Starbucks/Google route of just trying to avoid tax completely. Given the choice between writing a column, and filing my tax return, I decided to see if I could easily offshore myself, using just the internet, with no specialist advice.

I expected it to be quite hard. That I'd need sixteen highly paid unscrupulous lawyers and a copy of Tolley's tax guide in front of me. Actually, it wasn't hard, at all.

First off, I had to choose my tax haven. Now, all the classics - Cayman Islands, Channel Islands, Luxembourg, Monaco, all seemed a bit passé, full of the kind of permatanned Eurotrash in white chinos who might try to bum cigarettes from me while I was relaxing on my yacht. I decided on the Marshall Islands, a Pacific archipelago which my grandfather visited with the British Pacific Fleet in 1945, which he described in his diaries as a "festering hole, stinking of excrement... heat unbearable".

I then googled the phrase "Marshall Islands Tax Haven", and on the first page of results, came across the Hong Kong-based company that the Marshall Islands have outsourced their company registration to. They have a 24-hour company registration hotline, which I of course called. I explained to the nice lady I spoke to that I wanted to set up a company in the Islands, with the aim of minimizing my tax exposure and making it hard for anyone to find out about my finances.

She explained to me I could have that within 24 hours. In addition to a zero tax jurisdiction, I was also getting a complete waiver on my corporate liability, no corporate filing obligations, total secrecy for my shareholders, and a complete waiver on any need to file accounting returns or prepare accounts for audit. For a small extra fee, they also offered to set me up a bank account in my choice of Hong Kong, Singapore or Shanghai (with debit cards, so I could spend in the UK, of course).

The total cost of the full package was about £900 - about one-thirteenth of what I'm due to fork over to HMRC by 31 January. Of course, as an added benefit, I'd never have to pay tax ever again. As their website states "in this modern age with the high quality of services available, offshore is now a relatively simple and affordable procedure for almost anyone. Once having moved all or part of your business offshore, the savings made by the low-tax or tax-free status opens up a whole new world of investment and business opportunities".

Unfortunately, when I mentioned to the lady that I'd like to write up the experience for a newspaper, she hung up the phone on me, so I guess I'll have to submit that tax return after all.

But in case you think "well, this is all very well, but I doubt it would really work", the company I spoke to really does hold the rights to administer corporate registrations for the Marshall Islands, and if HMRC wanted to find out about my tax affairs, it would have to investigate my affairs, find my Hong Kong bank account (numbered of course, not named), then issue proceedings in both China and the Marshall Islands. It's probable the game isn't worth the candle for HMRC if you're a lowly TV producer, rather than say, someone as rich as Mitt Romney. If the Marshall Islands don't take your fancy, there are plenty of firms offering to offshore you to Panama, Belize, the Caymans or Cyprus, who are using Google Adwords to show up to those googling "Marshall Islands Tax Haven".

I spoke with a tax expert about whether the structure I'd been offered would be legal. He said, in no uncertain terms "what you're suggesting would be a crime. Admittedly, a crime that's relatively easy to commit and relatively hard to investigate." He did also concede that with a little tweaking, it could be made kosher, but that it would be unlikely to be worthwhile legally for people with incomes under £150,000 a year. Still, that salary wouldn't exactly put me in the ranks of the super-rich; I probably wouldn't be troubling Abramovich to buy Chelsea. Maybe something like Folkestone Invicta FC . . .

Still, what the experiment showed me was that in the online age, international tax dodging doesn't have to be (and probably isn't) the preserve of multi-national mega corporations. In the connected, globalised world of the internet, it's very easy to find a tax haven, and the companies and consultancies who offer to move you (or your business) to one are easily available. It's probably something governments should be looking into stopping before it becomes more common.

Willard Foxton is a freelance journalist, who tweets @WillardFoxton

The Marshall Islands - solution to all your not-wanting-to-pay-any-tax problems. Photograph: Getty Images

Willard Foxton is a card-carrying Tory, and in his spare time a freelance television producer, who makes current affairs films for the BBC and Channel 4. Find him on Twitter as @WillardFoxton.

Getty Images.
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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.