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This is how the K2 tax avoidance scheme works

This is how the K2 tax avoidance scheme works

The recent Times investigation into tax avoidance in the UK said television personality and comedian Jimmy Carr used an offshore wealth management scheme called K2, this is how the K2 tax avoidance scheme works.

How the K2 tax avoidance scheme works is by high UK earners quitting their jobs and are then hired by an offshore company, the offshore company then hires out the UK high earners services and invoices out their services from the offshore company.

The high earner is then either paid a minimum wage by the UK company or the offshore company which is declared to HMRC in the normal way.

This is how the K2 tax avoidance scheme works

Corporation Tax This is how the K2 tax avoidance scheme worksThe offshore company then loans the high earner the rest of their money minus of course their fees which are about 20% of the invoice value.

This is how the K2 tax avoidance scheme works.

High earners using the K2 Scheme do not keep as much money as is being portrayed.

This is how the K2 tax avoidance scheme works in general terms the actual workings may be slightly different to those described here.

The Prime Minister described this way of avoiding tax as “Very Dodgy”. The question is why is it dodgy? It is not illegal or even close to being illegal because it is declared to HMRC every year.

What it is, is very difficult to close down.

If you were to say the government should tax the loans, then everybody would have to pay tax on their mortgage and any other loans that they took out.

This has the government in a very difficult position and the only way they can deal with it is by embarrassing people that use this and similar schemes.

This is how the K2 tax avoidance scheme works for individuals and companies and lets not forget the UK is the fourth highest taxed country in the world.

This is how the K2 tax avoidance scheme works

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