Offshoring - A Different Type of a Limited Company

Offshoring is only a tax compliant way in which to operate under the correct circumstances.  For the vast majority of contractors, it is not an available / legal option.

Offshoring can take many forms.  The common setup for contractors is where contractual monies earned are sent outside the UK, and therefore UK tax system.  These are then processed before being passed back to the contractor to spend.  This in itself in not illegal.

If you are a UK resident, and the funds were earned within the UK, the money will be required to have UK taxes deducted from it. 

A common misunderstanding is that the offshore company will be liable for any unpaid taxes. This is not true.  It is the contractor’s responsibility to pay the correct tax on the money that they have earned to HMRC.

Some recruitment agencies and clients will not pay invoices to bank accounts outside the UK, especially where the work being carried out is within the UK by a UK national. This is due to the risk of the agency being pursued by HMRC for any unpaid taxes.

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