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I get annoyed when I read news headlines about how investing offshore is morally wrong. It’s a manipulative tactic that uses our emotions to sell news and it’s time that we all start talking about money in a more open and honest way.

Why are we, as a nation of readers, sucked into believing that anyone with money must be immoral?

Well, the tall poppy syndrome is nothing new and it explains why readers delight in hearing about celebrities who have been ‘caught’ in tax-evasion schemes. And there are certainly members of our society who, it has become clear, instruct their accountants to actively find ways to avoid paying their way.

But others simply don’t understand the complexities of managing money across borders and are let down by their ‘advisors’.

Five reasons why ‘offshore’ is not a dirty word

At Haines Watts, we’ve never been afraid to tackle tricky subjects head on. So, let me clarify my position: we do not condone illegal tax planning under any circumstances. Instead, we conduct proactive tax planning on behalf of our clients.

So, in that tradition, here are my top five offshore myths* – dispelled.

1. If you want to invest offshore, you must be looking to evade tax

Being proactive about the tax you pay is not immoral or illegal as long as you declare your income to HMRC and pay the tax due. This is a normal part of both business planning and personal financial planning, and will ensure your hard-earned money is working as hard as possible for you.

It may mean you have an account in a low-tax jurisdiction or perhaps save money in a country where you plan to retire. You may even look to spread risk by diversifying your portfolio across alternative regions and industries. Or, you may restructure your business and have commercial reasons for placing money overseas.

2. It would be better to invest in the UK

Again, untrue. We are in a global economy. No nation can operate independently of all others. Developing economies, particularly those with industries that were once government-owned, often rely on international money to upgrade infrastructure and grow. If all goes well, they benefit and so do the investors.

3. All overseas investments are tax-evasion schemes

There are some restrictions on some overseas investments, put in place predominantly for political reasons. But with expert advice, investing offshore can offer you can access to genuine opportunities. Indeed, as we enter a post-Brexit era, the need to continue building these new relationships with international trading partners in global markets will only increase.

4. Investing overseas carries greater risk

Offshore investing actually offers a greater spread of opportunities, which could reduce – not necessarily increase – risk. It provides access to a much greater spread of companies, sectors and economies and enables business owners to reduce their commercial exposure from everything from matrimonial breakdown to lawsuits. And it allows you to make the most of movements in the markets – just ask your average pension fund manager.

5. Only wealthy celebrities invest offshore

So that means, of course, that anyone with a pension is very likely to have money invested in companies overseas. And, as a business owner, you are now for the most part operating in a global marketplace, so your financial arrangements will also have become more internationally focused.

So, once again and with feeling, offshore investing is an everyday and perfectly moral occurrence – as long as you declare all global income to HMRC and pay your taxes.

* Please note, each of these is accompanied by the caveat that all UK residents must declare all their global income to HMRC and pay the tax due.

Are you unsure about offshore investing?

Find and contact your local Haines Watts office

About the author

Karen McLellan

Karen specialises in providing business consultancy, tax mitigation and accountancy services to owner-managed businesses. As a business owner herself, Karen understands the challenges of building and running a business.

She provides strategic advice to clients which has a positive impact on the growth and value of their business, and which helps the individual achieve their personal goals. Whether its advice on restructuring, tax mitigation, succession planning or preparing for sale, Karen can help the client get to where they want to be.

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