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.

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Leader: The divisions within Labour

Labour’s divisions have rendered it unfit for government at a moment of profound political change.

Labour is a party torn between its parliamentary and activist wings. Since Jeremy Corbyn, who this week appealed desperately for unity, was re-elected by a landslide last September, Labour has become the first opposition in 35 years to lose a ­by-election to the governing party and has continually trailed the Conservatives by a double-digit margin. Yet polling suggests that, were Mr Corbyn’s leadership challenged again, he would win by a comfortable margin. Meanwhile, many of the party’s most gifted and experienced MPs refuse to serve on the front bench. In 2015 Mr Corbyn made the leadership ballot only with the aid of political opponents such as Margaret Beckett and Frank Field. Of the 36 MPs who nominated him, just 15 went on to vote for him.

Having hugely underestimated the strength of the Labour left once, the Parliamentary Labour Party (PLP) will not do so again. In the contest that will follow Mr Corbyn’s eventual departure, the centrists could lock out potential successors such as the shadow business secretary, Rebecca Long-Bailey. Under Labour’s current rules, candidates require support from at least 15 per cent of the party’s MPs and MEPs.

This conundrum explains the attempt by Mr Corbyn’s supporters to reduce the threshold to 5 per cent. The “McDonnell amendment” (named after the shadow chancellor, who failed to make the ballot in 2007 and 2010) is being championed by the Bennite Campaign for Labour Party Democracy and Jon Lansman of Momentum, who is interviewed by Tanya Gold on page 34. “For 20 years the left was denied a voice,” he tweeted to the party’s deputy leader, Tom Watson, on 19 March. “We will deny a voice to no one. We face big challenges, and we need our mass membership to win again.”

The passage of the amendment at this year’s Labour conference would aid Mr Lansman’s decades-long quest to bring the party under the full control of activists. MPs have already lost the third of the vote they held under the electoral college system. They face losing what little influence they retain.

No Labour leader has received less support from his MPs than Mr Corbyn. However, the amendment would enable the election of an even more unpopular figure. For this reason, it should be resolutely opposed. One should respect the motivation of the members and activists, yet Labour must remain a party capable of appealing to a majority of people, a party that is capable of winning elections.

Since it was founded, Labour has been an explicitly parliamentary party. As Clause One of its constitution states: “[The party’s] purpose is to organise and maintain in Parliament and in the country a political Labour Party.” The absurdity of a leader opposed by as much as 95 per cent of his own MPs is incompatible with this mission. Those who do not enjoy the backing of their parliamentary colleagues will struggle to persuade the voters that they deserve their support.

Labour’s divisions have rendered it unfit for government at a moment of profound political change. Rather than formalising this split, the party needs to overcome it – or prepare for one of the greatest defeats in its history.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution