PPRuNe Forums - View Single Post - Pilots self-employed for tax purposes.
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Old 13th Aug 2009, 12:12
  #43 (permalink)  
Hasdrubal
 
Join Date: May 2009
Location: China
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If a guy really wanted to avoid paying any tax he could. The problem being it would be expensive from a tax advice point of view. You could use a company in some offshore location like the British Virgin Islands and take loans from the company instead of salary.

The problem is that when the tax man comes knocking on the door he will smell a tax avoidance scheme and will make you life difficult. By paying less tax in somewhere like Ireland when he knocks on the door you give him an Irish tax return and he might reckon that you are earning a small salary for an airline pilot compared to what you would earn in England but you are tax compliant none the less.

At the end of the day the tax office cannot tell you how much you should earn. If a guy is dumb enough to take a captains role with a company and agree a salary of maybe only £20k then it is not the place of the Inland Revenue to decide that you are a nut job for taking the job.

lets say I get a job working in McDonalds on minimum wage. The tax man can't make me pay more tax just because I am an airline pilot and the going rate is £150k. Its the same principal if you are only paid a salary of £30k in Ireland and you use the Irish tax breaks on new companies to park £100k then there is nothing wrong with this. It is legal, you are tax compliant, and you are providing for your future.

The other that should be mentioned is that CGT in Ireland is half what it is in the UK. So lets say you park £300k in the company after the three years. You finish your contract with BRK and then pay some accountant £1,000 to wind up the company. The assets of the company are £300k. they are distributed amung the shareholders, being you, and the shareholder pays 22% CGT on the cash.

Anyone on a contract, rather than bitching and moaning about it on the other discussions on this site and lament the inaction of the unions etc., should get themselves organised, get themselves set up in Ireland for the next three years at least and cream a bit of cash for their future.

As the meerkat would say "simples"
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