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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Jeremy Corbyn is not standing down - 172 people cannot drown out democracy

The Labour Party could right now be exploiting a bitter Conservative leadership contest, writes shadow chancellor John McDonnell. 

The shadow chancellor writes exclusively for The New Statesman amid one of the most turbulent weeks in politics this century.

The “coup” taking place in the Labour Party

The instability from Brexit has extended into the Parliamentary Labour Party with members of the shadow cabinet standing down. I would like to thank all of those who have participated with me for their work.

Frustratingly, this has come at the worst possible time for our country. And at a time in which we our party could have used to reset the economic narrative that the Tories planted in the public during the summer of 2010 when our party was in the midst of a leadership contest.

Our party right now could be exploiting a bitter Conservative leadership contest that’ll probably lead to electing a Tory leader who will be responsible for any economic fallout from Brexit. The Tories have peddled lies over the past six years over the management of our economy and the state of the public finance, which the decision last Thursday is sadly exposing.

I strongly believe that if some colleagues are not careful then they may cause irreparable damage to our party and the country. 

The Labour Party changed last September. Jeremy was elected with the largest mandate of any political leader in the history of our country. Our party’s values of democracy and solidarity seem to be asked of the membership and always met. Sadly not by some members of the PLP. 

There are those in our party who could not come to terms with the fact that a quarter of a million members could clearly see that the our party’s broken election model has lead to two back to back defeats and needed replacing. Like the wisdom of crowds, our membership understands that we cant keep going on doing the same thing electorally and getting the same results.

I believe that we can all still work together, but I feel some MPs need to get off their chest what they have been holding back since last Autumn. Maybe then they will hear the message that our membership sent them.

The truth is that Jeremy is not standing down. In the Labour Party our members are sovereign. There was an election held and a decision made, and 172 people cannot outweigh a quarter of a million others. 

It would risk sending the worst possible message we could send as a party to the electorate - that Labour does not respect the democratic process.

The economics of Brexit

The Leave vote delivered an immense shock to the political system creating great instability. Of immediate concern is the deteriorating economic situation. Credible economic forecasters virtually unanimously warned that leaving the European Union would be an enormous shock to the economy. 

The disagreements centred on the severity of the shock, and the long-term damage done. To that initial shock must be added the realisation that there was no plan made for a post-Brexit Britain. 

George Osborne has not secured the foundations of our economy and the market volatility reflects that missed opportunity. With turmoil continuing, and major employers already threatening redundancies, the immediate task is to stabilise markets and reassure investors and savers that financial institutions remain rock solid. 

The measures announced by Bank of England Governor Mark Carney early on Friday morning, and the later statement from the Chancellor, are to be welcomed and we have requested a briefing under Privy Council rules on the financial authorities’ contingency plans. It is also reassuring that George Osborne has now moved a threatened, post-Brexit austerity Budget until at least the Autumn. 

Nonetheless, with a recession now forecast, any attempt to push further austerity measures in response to the crisis would be an act of exceptional economic folly. The Chancellor’s own fiscal targets have long since been missed and simply redoubling the misery of spending cuts and tax rises will not bring them any closer to achievement. 

What is needed in a crisis like this is urgent government action to shore up investment, already falling before the vote. Shovel-ready projects should be brought forward, creating jobs and focused on beginning to rebuild those parts of the country currently most deprived – and where the vote to Leave was strongest. As a country we will get through this crisis, and we will do so when we no longer tolerate a situation in which too many of our people are excluded from even the chance of prosperity.

The referendum result

I have been in consultation with many economist, trade union and business leaders since the early hours of the morning when we learnt the result. I hope to give a speech this Friday going into further details of Labour’s economic response, but the result last Thursday came as a blow to many of us in the Labour Party.

All wings of the Labour movement fought hard, and two-thirds of our voters swung to Remain – the same as the SNP, and far more than the Tories, who split 60:40 for Leave. 

Labour will now be fighting to ensure whatever negotiations now take place, and whatever proposals the government chooses to bring forward, will maintain hard-won protections for working people in this country.

The new Labour leadership inherited the Labour In campaign last year. Obviously as with any campaign we will now have to reassess, but the hard work of the staff who worked on the campaign cannot be questioned. They did a fantastic job. 

Jeremy Corbyn also managed to help get out a larger number of our voters than the other main Westminster leaders across the country. 

But the sad truth is that we lost regardless. We need to learn lessons of the referendum and the General Election campaigns, and question whether the way we campaign as a party needs to be changed. 

It is clear that we cannot fight the next election using the same outdated practises and policies that were in place at the last two general elections, and the recent referendum. 

We cannot continue to do the same things in the same ways and get the same results. Those people who need a Labour government the most cannot afford it.


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015.