Fun Online Polls & Jimmy Carr

There's a brief summary of how the K2 scheme works at money.co.uk:

Basically the scheme involves:

* Resigning from employment in the UK
* Establishing a company based overseas
* Being hired by the offshore company on a minimal salary
* Paying any earnings directly to the offshore company
* Receiving large interest free loans
* Declaring these interest free loans as tax liabilities to reduce Income Tax payable to HMRC

It's nothing new of course, Wayne Rooney et al were caught out doing something similar over a year ago, and in the meantime, they have introduced anti-avoidance legislation to make it even more difficult to pull off.

Your biggest stumbling blocks are proving that:
a) the underlying earnings are not employment income in the first place. If you had a paid job from which you resign, while continuing to do the same work, then you are on a sticky wicket,
b) the company receiving the income is not owned and controlled by a UK individual/s,
c) there is no transfer of assets (such as intellectual property rights) to somebody abroad.

So if you're not caught under (b) you are caught under (c), and falling between 'employment income' (a) on the one hand and 'exploiting intellectual property' (c) (like selling DVDs, which is subject to 20% withholding tax in any case) on the other hand is also very tricky; it has to be straight down the middle self-employment income.

Of course, seeing as of how Jimmy Carr has chosen to live in an £8.5 million mansion in Hampstead, none of this would be anything to worry about if we just had Land Value Tax. He'd pay his £600,000 a year LVT like a gentleman, and as long as he earns more than £1 million a year he'd still be better off than if he paid full whack under current rules.

So that's this week's (belated) Fun Online Poll.

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