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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An unmatched font of knowledge

Edinburgh’s global reputation as a knowledge economy is rooted in the performance and international outlook of its four universities.

As sociologist-turned US Senator Daniel Patrick Moynihan recognised when asked how to create a world-class city, a strong academic offering is pivotal to any forward-looking, ambitious city. “Build a university,” he said, “and wait 200 years.” He recognised the long-term return such an investment can deliver; how a renowned academic institution can help attract the world. However, in today’s increasingly globalised higher education sector, world-class universities no longer rely on the world coming to come to them – their outlook is increasingly international.

Boasting four world-class universities, Edinburgh not only attracts and retains students from around the world, but also increasingly exports its own distinctively Scottish brand of academic excellence. In fact, 53.9% of the city’s working age population is educated to degree level.

In the most recent QS World University Rankings, the University of Edinburgh was named as the 21st best university in the world, reflecting its reputation for research and teaching. It’s a fact reflected in the latest UK Research Exercise Framework (REF), conducted in 2014, which judged 96% of its academic departments to be producing world-leading research.

Innovation engine

Measured across the UK, annual Gross Value Added (GVA) by University of Edinburgh start-ups contributes more than £164m to the UK economy. In fact, of 262 companies to emerge from the university since the 1960s, 81% remain active today, employing more than 2,700 staff globally. That performance places the University of Edinburgh ahead of institutions such as MIT in terms of the number of start-ups it generates; an innovation hothouse that underlines why one in four graduates remain in Edinburgh and why blue chip brands such as Amazon, IBM and Microsoft all have R&D facilities in the city.

One such spin out making its mark is PureLiFi, founded by Professor Harald Haas to commercialise his groundbreaking research on data transmission using the visible light spectrum. With data transfer speeds 10,000 times faster than radio waves, LiFi not only enables bandwidths of 1 Gigabit/sec but is also far more secure.

Edinburgh’s universities play a pivotal role in the local economy. Through its core operations, knowledge transfer activities and world-class research the University generated £4.9bn in GVA and 44,500 jobs globally, when accounting for international alumni.

With £1.4bn earmarked for estate development over the next 10 years, the University of Edinburgh remains the city’s largest property developer. Its extensive programme of investment includes the soon-to-open Higgs Centre for Innovation. A partnership with the UK Astronomy Technology Centre, the new centre will open next year and will supply business incubation support for potential big data and space technology applications, enabling start-ups to realise the commercial potential of applied research in subjects such as particle physics.

It’s a story of innovation that is mirrored across Edinburgh’s academic landscape. Each university has carved its own areas of academic excellence and research expertise, such as the University of Edinburgh’s renowned School of Informatics, ranked among the world’s elite institutions for Computer Science. 

The future of energy

Research conducted into the economic impact of Heriot-Watt University demonstrated that it generates £278m in annual GVA for the Scottish economy and directly supports more than 6,000 jobs.

Set in 380-acres of picturesque parkland, Heriot-Watt University incorporates the Edinburgh Research Park, the first science park of its kind in the UK and now home to more than 40 companies.

Consistently ranked in the top 25% of UK universities, Heriot-Watt University enjoys an increasingly international reputation underpinned by a strong track record in research. 82% of the institution’s research is considered world-class (REF) – a fact reflected in a record breaking year for the university, attracting £40.6m in research funding in 2015. With an expanding campus in Dubai and last year’s opening of a £35m campus in Malaysia, Heriot-Watt is now among the UK’s top five universities in terms of international presence and numbers of international students.

"In 2015, Heriot-Watt University was ranked 34th overall in the QS ‘Top 50 under 50’ world rankings." 

Its established strengths in industry-related research will be further boosted with the imminent opening of the £20m Lyell Centre. It will become the Scottish headquarters of the British Geological Survey, and research will focus on global issues such as energy supply, environmental impact and climate change. As well as providing laboratory facilities, the new centre will feature a 50,000 litre climate change research aquarium, the UK Natural Environment Research Council Centre for Doctoral Training (CDT) in Oil and Gas, and the Shell Centre for Exploration Geoscience.

International appeal

An increasingly global outlook, supported by a bold international strategy, is helping to drive Edinburgh Napier University’s growth. The university now has more than 4,500 students studying its overseas programmes, through partnerships with institutions in Hong Kong, Singapore, China, Sri Lanka and India.

Edinburgh Napier has been present in Hong Kong for more than 20 years and its impact grows year-on-year. Already the UK’s largest higher education provider in the territory, more than 1,500 students graduated in 2015 alone.

In terms of world-leading research, Edinburgh Napier continues to make its mark, with the REF judging 54% of its research to be either world-class or internationally excellent in 2014. The assessment singled out particular strengths in Earth Systems and Environmental Sciences, where it was rated the top UK modern university for research impact. Taking into account research, knowledge exchange, as well as student and staff spending, Edinburgh Napier University generates in excess of £201.9m GVA and supports 2,897 jobs in the city economy.

On the south-east side of Edinburgh, Queen Margaret University is Scotland’s first university to have an on-campus Business Gateway, highlighting the emphasis placed on business creation and innovation.

QMU moved up 49 places overall in the 2014 REF, taking it to 80th place in The Times’ rankings for research excellence in the UK. The Framework scored 58% of Queen Margaret’s research as either world-leading or internationally excellent, especially in relation to Speech and Language Sciences, where the University is ranked 2nd in the UK.

In terms of its international appeal, one in five of Queen Margaret’s students now comes from outside the EU, and it is also expanding its overseas programme offer, which already sees courses delivered in Greece, India, Nepal, Saudi Arabia and Singapore.

With 820 years of collective academic excellence to export to the world, Edinburgh enjoys a truly privileged position in the evolving story of academic globalisation and the commercialisation of world-class research and innovation. If he were still around today, Senator Moynihan would no doubt agree – a world-class city indeed.

For further information www.investinedinburgh.com