Company & Personal Off-shore Tax Avoidance
Prior to continuance, it might be useful to explain the technical difference between Tax Evasion and Tax Avoidance. The former earns you a slap on the wrists. The latter, a spell on the dreaded diet de porridge.
By Darcy Kimble & Mick Mahoney
Amateur Hour in Saint Hellier
Mr Walker is what is known as an entrepreneurial type, who runs a string of successful businesses. For some-time Mr Walker had found himself growing increasingly resentful by the demands made on him by the Revenue Service.
Who, in Mr Walker’s view, were being most unreasonable. One morning whilst delivering spirits to ‘The Crown’, Walker poured his heart out to Patrick, the establishment’s owner and an upstanding member of Walmington-on-Sea’s business community. Pat informs Walker that an off-shore Shell company will save him a few tears and a few pounds, to boot.
Initially, the entrepreneur is sceptical but at the Dog-track that evening, mentions it to a fellow member of the racing fraternity, who appears most surprised that Walker is ‘Still out of the coup’. With no desire to remain ‘out of it’ Walker investigates the matter and in no time, sources a list of companies who, for a fee, undertake the entire process for him. However, Walker did not build an empire by paying extortionate fees for, from what he could gather, was a straight-forward task. As it’s geographically the closest to Walmington-on-Sea, Walker opts for Jersey as his Tax-haven.
A month later, with his license approved by the ‘Jersey Regulation of Undertakings Office’, Walker flies over to Saint Hellier for a meeting with Jersey Financial Services Commission. Because the new company will trade under a different name and to ensure all the wheels are oiled, he hires a local solicitor.
Three hours later and £700 pounds lighter, Walker emerges from the offices of the Jersey Financial Services with a registered Limited Liability Company, boasting a registered Jersey address. The cost of his new venture ‘Walker’s Laundry’ breaks into; license fee is £30. Formation fee, £200. Admin £70. Solicitor, £450. Walker felt quite pleased with himself. Especially, as non-resident business owner, he would pay a flat rate of £600 per annum in Income Tax. From the café overlooking Saint Hellier Marina, Mr Walker strode, almost giddily, for the nearest-
On being ushered into a side-room, Mr Walker presents his passport by way of identification and supplies his Company Registration (Including Jersey address and statement of Incorporation SoI), the address of his Registrar (This coincides with that of his solicitor and that of, Walker’s Laundry).
Once back in Walmington, Walker pops out for a celebratory pint in ‘The Crown’. It is during his seventh, that Patrick finds the time to explain that getting the money into Jersey was easy part. The difficult and potentially illegal bit, is getting it back in. Needless to say, this puts a dampener on Walker’s seventh pint and causes him to sink, several more.
However, within weeks, the entrepreneur devises a method of getting his cash out of Jersey and into Walmington. Having done so, he sets about offering the same service to various other local businessmen. To ensure his ten-percent cut, Walker insists on becoming a nominee director of each company he registers. This enables him to see the books without the facility of withdrawing money.
Amongst those who join-in on Walker’s ‘Coup’ is Mr Jones, the town’s butcher. Originally, Jones had been reluctant but his new fiancé, who some suspected of leading the old boy astray, insisted on his participation.
Below, Mr Jones and his fiancé.
Trouble on the Home-front
Walmington-on-Sea’s bank is managed by Mr Mainwaring, who knew Walker on two fronts and didn’t like him, on either. Initially, the relationship was restricted to Walker being a bank customer but had developed on the creation of Walmington-on-Sea’s Second World War Re-enactment Group. Of which, Mr Mainwaring, having proclaimed himself a Captain, was the group’s highest-ranking officer. It hadn’t gone down well with the rest of the men.
Above, Mainwaring with some of the Re-enactment group.
The antipathy between Walker and Mainwaring was primarily down to their opposing personality-types. Walker, flashy and fast. Mainwaring, sober and steadfast. The bank-manager’s dislike had intensified of late. It was one thing Walker withdrawing his funds from the bank- good riddance- being Mainwaring’s view. It was another, him taking a Frazer the Undertaker’s, Jones the Butcher’s and Hodges, the Milkman’s money, along with him. Ideally, he’d like to know where they had taken it. Knowing Walker, it would be some sort of fly-by-night scheme that would cost the others dear. Mainwaring had discussed the matter with Wilson, his Assistant Manager and Wilson, had mentioned it to Pike. One of the bank’s junior staff. Normally, Pike would have kept out of it because he considered Mr Mainwaring an old windbag but as Walker had not only sold him a faulty PlayStation 5, but was now refusing to refund his money. Pike decided to investigate the matter…
Below, Pike, on discovering that Walker will not return his PS5 payment.
A few months previously, the bank had installed some new software called ‘Compliance DNA’. A big fuss had been made and there was a two-day course in how to use it. Of the three attendees, one had emigrated, another left to work in retail and Maureen, was currently on Maternity Leave. Pike, who fiddled about with the system during the bank’s slower periods, found it self-explanatory and now wanted to put his fiddling to effective use by making Walker regret not refunding £400 Pike had paid for the PlayStation.
Which is exactly what he did. Though Compliance DNA, Pike locates all of Walker’s bank accounts and links them, to create a Single Customer View. Once this is achieved, Pike has a complete view of all Walker’s fiscal activities and sees that some of these have been ‘Flagged’ by the system. These fall under ‘Suspicious Activities’ and from what Pike can gather, are generated through Walker’s becoming a director of six different companies that he has incorporated. All Off-shore and all, within a matter of months. One seeing these Flags, Pike triggers an internal process that will certify a risk mitigation protocol is in place and Enhanced Due Diligence is payed.
Un-beknown to Walker, his name is now a Suspicious Activity Report. Pike wondered how Mr Mainwaring was going to call him a ‘Stupid boy’ now?