Offshore Banking

[Luke SkyToddler]

Hi all

Question for some of you experienced contract pilots out there

Like a lot of people, I'm contemplating going and doing some agency flying in India or Asia in the next year or two, still at the stage of trying to get a feel for what's out there money wise, PARC and Rishworth and IAC and all these big agencies seem to quote the pay as tax free.

Now it might be a stupid question but do these agencies / airlines sort you out with some standard deal for banking, or is it our problem to sort it ourselves, and if so what is the best banking strategy for living abroad for 3/4 of the year on a commuting contract, and keeping the tax man's grubby mitts off your money?

[alatnariver]

I used to be a contractor working for one of the agencies you mentioned.

Most, if not all contracts are paying "tax free" or to be more precise it's up to you to sort out the tax.

Try HSBC they offer offshore banking and have plenty of branch offices and ATM access around the globe and especially in Asia. I don't know about India.

[parabellum]

Watch Out for Gordon Brown!

If you have any connection to the UK watch out, Gordon Brown has decided that if he thinks your domicile is the UK then the off-shore banks have to release information about any accounts you may hold with them. He will then tax your income. Not sure if other European countries take the same view though.

[cavortingcheetah]

Not only that and that alone.

Now that days of arrival and departure to and from the UK can be counted as resident days (recent High Court case re: Seychelles domiciled UK citizen claiming non residency) commute jobs are harder to wash through the revenue as non resident occupations.
The Revenue and Customs have now become pretty thorough and have the right to impose back taxes, compound interest on top of that, apply a fine of up to 100% and go back twenty years if they believe that fraud is involved. Obviously, failure to declare world wide income for UK tax purposes could be construed as fraudulent.
The tax free salary offered by so many agencies is probably only tax free to you in the country in which it is paid. You, the beneficiary are not necessarily tax free. It is your problem to sort out with the revenue in your country of residence. Proper advice from a suitable source would be a very sensible idea?

[Shanwick Shanwick]

Cavorting Cheetah

I think you'll find that high court ruling applies to that case alone as the defendant was taking the piss!

In another case, the IR's legal team considered the total time, in hours, spent in the UK as opposed to that spent offshore to define "Centre of Life." That chap was also taking the piss!

[cavortingcheetah]

Not so sure that another man's piss should guide one into a tax planning strategy which might occasion serious pain if the IR's newly acquired (Revenue & Customs) aggression reared its rather loathsome head.
Caution might be a well advised watchword?

[On Final]

I am not the expert but have looked into the offshore banking process. I am a contract pilot and paid tax free. The way it works from the USA is if you work abroad you are tax exempt to approx 88,000 USD. You are responsible for taxes on anything over the 88K. If you are on a commuting contract for the first year you are suppose to be "out of country" for 330 days for the first year of your work. After the first year you can come and go as you please.

So, what does this mean? In the USA on your tax return you have to disclose any offshore trusts, bank accounts or monies you have or control anywhere in the World. If you fail to do so on your tax return you could be held accountable for all sorts of penalties including pergury.

I am not trying to tell anyone to do this but here is what I would do:

1. Offshore corporation from Panama using a registered agent with your name not on any official paper for the corporation.

2. Get a letter of resignation signed by the registered agent to you for safe keeping.

3. Get a letter from the corporation to you stating you have the right to open the bank account for the corporation but "Dont Disclose Which Bank to your registered agent".You will need a copy of the articles of incorporation as well.

4. Take that information with you to your offshore bank and open the account for the corporation. Your deposits should be tax free. Get yourself a debit card in the coporations name and simply pull the cash in "USD" or whatever funds you like from your account.

Do not disclose your bank account information to anyone including tax return. Be careful of any banks working with the IMF or World bank. The IRS can pressure the banks for data.

Try Offshore banking in China because there is a nice wall between China and the USA whichs blocks the IMF, IRS.

Know you are totally tax free.

Good Luck..!

[On Final]

I forgot to mention if you are banking Offshore there are a couple important details you need to consider.

If you have a house or residence in the USA you will need to file taxes and disclose "ALL MONEY" that goes through your regular US bank account. This is the money you will disclose to the IRS as income and pay your normal bills with. You will have to file a tax return that will justify your means of living in the US. Lets say about 25,000 USD that pays your electric, car insurance, gas and ome food etc. Now you tax return wont trigger any RED Flags. If you are audited by the IRS you can justify your lifestyle, bank records without any worries.

Warning:

1. The money you take from your Offshore debit card in cash should "NEVER NEVER" be deposited into your bank account and reported. Remember, anything you run through your bank account has to be reported as income and on your tax return. If you are audited the IRS will want all of your bank records and see all deposits.

2. The Cash from your debit card is used simply as cash for small items. Your money can be used for many purchases (not cars etc) food, vacations, clothes, eating out etc.

3. The offshore money should be kept Offshore and later used in your retirement portfolio.

Be careful..!!

[Broke Flap]

What you can legally do is create an offshore corporation which independently contracts your services. Essentially, the employer pays the contracting corporation directly then the corporation pays its employee (you) for services rendered. The corporation would pay you up to $88K /yr (tax free if living offshore for more than 335 days <not sure for UK!>) and the balance either sits in the corporate account accumulating interest or is invested through an offshore brokerage firm which corp would control. Any moneys gained from the residuals can be used for purchasing whatever the company deems necessary for what its employee needs (RE, car, plane, health ins., etc.) If you want to take it a step further, then place the corporation under a foundation. This would enable you to honestly say you do not own a foreign entity.
By the way, you do not always have to reveal that you have an offshore bank account. If you keep the balance under $10K you are not required to file it with the IRS. This gives you the flexibility to accept payments and "clear" the account by wiring it back to the states before it hits a reportable range. The guys over at OApanama should be able to help with this..

[On Final]

It can be done legally, your offshore corporation which can pay for everything but you have to report it to the IRS. The best way is not reporting anything, but it does put yourself in a tight spot when you file your 1040 and don't report your offshore interests. Your offshore corporation needs to be a working business too.

I think the safe way is what I mentioned before, keep your name off everything and your money in china. Know one can find it. Good Luck..!

[L'aviateur]

Be very careful with advice found online, in the UK it is well worth contacting a specialist offshore tax lawyer who will advise you and provide your tax returns usually for around 200 - 300 pounds per year.
The travel days being counted as days in the country is also something to watch out for; the anniversary dates of the tax year and keeping proper evidence. The important thing is to keep boarding pass stubs, passport stamps, crew rosters etc to prove your whereabouts. The IR don't investigate every claim, but a few years down the line you might find you have to prove everything for the current claim and historically.
I use an accountant and simply hand everything over.

[Kelly Hopper]

A word of warning...... Offshore banking centres are not safe!
The IOM has a £50k guarantee with no way of funding it as is now being proven with the Kaupthing collapse.
The channel islands have no scheme at all unless you are resident.
Thousands os savers have lost all their money over the last 6 months thanks to these offshore centres.
Tax is taken at source anyway so what are the advantages? Just bank onshore.

[excrab]

The latest advise I got from the UK tax office is that wheter you bank on or offshore makes absolutely no difference to whether you are considered resident in the UK. However if you bank onshore you will be taxed on any interest arising.

The 91 day rule is the important one, but you also have to prove that you are non resident, one of the things they look at being your life style. If your partner and Children live in the UK and you spend 90 days a year in your home with them the revenue will probably argue that your life is really in the uk and class you as resident there.

If on the other hand you are single, have no property in the uk where you can live (either you don't own any or it is let long term and you don't have access to it, although you would be liable for tax on the rental income) then they will be more inclined to believe you when you say you have left the country.

Start off with a google search for "UK residency for tax purposes" or something similar and sit back for hours of enthralling reading. All of the rules and required forms are down loadable from the HMRC web site.

[Abacus]

Private Interest Foundation's, (PIF), Panama

Does anyone have any experience of these 'accounts' in Panama. Are they a secure and safe way of squirreling away your hard earned money. What are their advantages/disadvantages over the more regular offshore accounts with well known banks in Panama. Any advice or comments would be appreciated.

Thanks

Abacus

[uberwang]

Hey Guys

I have a job offer to fly a larger aircraft but my contract would be offshore. I have no idea how to go about this to be honest. Any advice on where to start? Is an Offshore tax lawyer the person to contact??

Danke people

Uberwang

[parabellum]

I think it will depend on where you are deemed to be resident for tax purposes, you don't state which country you are normally resident or where you will be paid etc.

The Fry Group in UK deal with this sort of thing all the time:


That won't be much help if you are are living in other parts of Europe though. Tax consultants are usually cheaper than lawyers.

[canuck76]

My brother was with department of taxation – he is black cow of family. One day he tell me – perhaps too many wine - that department taxation is the government. So for no problem at all they access to all government department computer and they do this. They have every entry and exit date from department immigration from forever. The day you leave and the day you arrive in your home, they always know this. He work on this section and every day he look at these files – who is coming and going and who is not stopping. Watch your trips very very careful. If they suspect you, they taxation people copy down all your records from department immigration computer from forever. On Final says very well how department taxation then questions you, my brother say the same.

I did work on contract offshore and so make tax haven banking to avoid tax. Huh – what a joke. There is no true story as "no tax". The accountants, the lawyers, the start money, the corporation, the audit and the corporation and the director fees every year, they cost much money. The very smallest I ever pay for "NO TAX", and it was something I look at very well, it was 7%. So the "tax" on "NO TAX" is 7% - every year. Maybe better to pay proper tax at home country sometimes. Maybe not.

[no sig]

Most importantly, you'll need to decide if you wish to become a UK non-resident and establish this with HM Revenue before you head off- this as mentioned above, restrcits your time in the UK to the 90 days a year. Otherwise, you are still within the UK tax system.

[Der absolute Hammer]

Well-if you reside in England you might find these interesting.

http://www.hmrc.gov.uk/cnr/p85.pdf

HM Revenue & Customs: International series

Also you need to study HMRC6 whihc gives lots of confusing guidelines.

Four things to remember about the British Revenue.

They are very good and nice people.
They have the power to knock down your front door at any time without any warrant and confiscate absolutely anything and nearly anyone where you live.
Whatever you think that they say will not necessarily be what they said.
They always recerve the right to drop you a note, years later, which begins with..
'It has come to our attention that....'

Anyone hear of a british member of parliament being so accosted by HMRC for house flipping or supporting his children to the tune of more than £3k per year allowance?