Should Sir Richard Branson be criticised for moving to the British Virgin Islands?

It’s been reported in the press recently that Sir Richard Branson and his wife are now living full time at their holiday island in the British Virgin Islands.

Critics have said that the move has been driven by tax savings, which Branson defends.

So what’s my take?

Well, firstly, it’s a little too late to worry about him avoiding tax: he’s already built up his massive fortune and any income that he gets goes to charity. Look at the sale of his Oxford estate to his children, which is reported to have gone for £1.35m last year. Surely if this was to avoid inheritance tax then this would have been wrapped up in trusts like the rest of his empire.

Maybe it’s just time for him to relax. Or maybe it’s just to try and live longer, after all, as Sir Richard says, “I have more money than I will ever need”, so maybe it’s eternal life that he’s after. Aren’t we all.

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Clampdown on offshore and u-turn on controlling persons

So in the past week we’ve had the autumn statement, which says the government is aiming to collect a further £2bn a year from tax evasion and avoidance, Margaret Hodge declaring tax avoidance schemes to be utterly immoral, Starbucks volunteering to pay £20m in corporation tax, and the Lib Dems declaring that George Osborne must be made to pay £55,000 in capital gains tax.

It might not have to be taxing, but it certainly seems to be.

In the autumn statement, chancellor George Osborne claimed that hundreds of millions of pounds of tax loopholes were being closed with immediate effect. But it’s a wonder that we’ve got into this mess, and that it’s continued for so long.

Next year will see a full review into offshore umbrella companies – and about time too. They’ve had the legislation to enforce this for a long time, so why not just do it?

A comprehensive offshore evasion strategy is planned for next spring, and employment intermediaries used to avoid tax and national insurance contributions are to be reviewed with an update in the 2013 budget.

Prosecutions for tax evasion are reported to be up by 80%, and the number of tax inspectors going after evaders and avoiders will be increased by 2500.

The controlling persons’ legislation has been dropped and replaced with tougher IR35 enforcement and clarity, which is to include limited company owners and directors. To also state that enforcement of moral practice within government has resulted already in the protection of tax revenues is a powerful message – cut off the supply and save tax…

Another part that will affect the umbrella industry is the scoping exercise that the Office of Tax Simplification is going to undertake. It will be looking in to ways to simplify employment benefits and expenses, which is great news and one to take part in I’m sure.

I think the most important thing to come out of the autumn statement is the closure of three more offshore loan schemes, as they go against the whole ethos of earned income. About time, too.

So, in summary, to quote Mr Osborne, “The UK needs a compliant and professional workforce to deliver growth.” This is great for UK umbrellas.

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From funny man to every day tax evasion

The first few months of the financial year have been busy, to say the least, what with taxation becoming high profile through Jimmy Carr and Take That’s avoidance, and Cameron’s reported haven. But it’s the lower profile cases – people working outside IR35 – that we’re more concerned with. And with the first rounds of the new IR35 consultation, tax isn’t a topic that’s about to die down any time soon.

The problem is, people are working but not paying national insurance. Limited company contracting gives them a way to do this, but people take a lot of risk; there’s no certain income and no employee benefits. And there’s possibly millions of limited companies out there. Some of them may be operating legitimately, and the government states that it does recognise them as a cornerstone of developing business. But many limited companies operate as a way for people to be creative with tax.

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