16 thoughts on “Everybody is outraged about offshore investment funds – because nobody understands what they are or what they do”

  1. Posted 09/11/2017 at 23:02 | Permalink

    Oh come on, it’s just a big tax dodging scam.

  2. Posted 10/11/2017 at 05:10 | Permalink

    Well explained.

  3. Posted 10/11/2017 at 10:54 | Permalink

    Thank you for adding some light to the debate. Too much heat so far.

  4. Posted 11/11/2017 at 09:37 | Permalink

    Finally, someone talking sense!

  5. Posted 11/11/2017 at 09:55 | Permalink

    Hi Jeremy

    I totally agree with the piece you have put together to make people understand what investment funds is and what they do. But I believe the issue with media report is not so much of tax avoidance by the monarch (Prince Charles) or there is wrongdoing for investing in offshore funds. I think it more to do with Conflicts of Interest by the Prince lobbying the government to lift ban on climate issue that will open up investment opportunities for the vehicle he has invested in.


  6. Posted 11/11/2017 at 10:21 | Permalink

    Fails on the 3rd paragraph of ‘what they do’. So they are subject to 0% tax offshore , instead of say 20% in the UK.
    Situation would be resolved by the investing personand/or company being taxed in the domicile they are based. e.g Amazon, Google, etc

  7. Posted 11/11/2017 at 15:53 | Permalink

    So You seemed to have just confirmed,, what i thought,, Companies,, People,, Pay no tax on the funds,, as they are only taxed on what the un-taxed investments “Make”,, and your saying if they did not invest into these off shore Tax Free investment funds,, they would find another way to invest there money Tax Free.. and without these companies/people investing these funds into off shore investments,, those places that reap all the investment profits from these off shore investors,,would suffer,, Bottom Line is the first Line I wrote,, there doing this to avoid paying a higher TAX from there home countries,, I personalty think this is wrong,, but if I had a lot of profits from a company i would be doing the same thing,, it’s all about making more money from your profits/investments,, should the home Countries have the right to TAX these off shore investments,,, My Answer is YES..!!!!!

  8. Posted 11/11/2017 at 21:44 | Permalink

    They only exist for one purpose – tax avoidance. You can dress it up all you like, but that’s the bottom line.

  9. Posted 11/11/2017 at 23:02 | Permalink

    Interesting how the bbc relies on stolen information as their reliable source of misinformation A new low for journalism by the BBC. You would think any independent journalist would start by focusing on why the information they use was hacked in the first place. Relying on stolen information means they sanction such illegal behavoir. It deems them an accomplice. They are doing everything to cast doubt, increase divisivion among the public because they are drowning from brexit. It is another sad day for BBC. To rely on tactics that employ division should be a red flag.

  10. Posted 12/11/2017 at 09:34 | Permalink

    Bermuda is not in the Caribbean

  11. Posted 12/11/2017 at 16:27 | Permalink

    Very well explained and reasoned article, however it does not address the tax avoidance aspect of using these investment vehicles. It was shown that individuals were placing their assets in to a trust that should have been outside of their control, but were still using the trusts for personal gain.
    When you can use a fund, which you supposedly have no direct control over, to buy fine wines, works of art and high end sports cars, then that appears to be a direct gain and therefore taxable. There were other examples given in the programme, but I suppose the question must be asked is how many others remain undetected and what that would represent in lost taxation to HMRC.

  12. Posted 12/11/2017 at 18:44 | Permalink


  13. Posted 14/11/2017 at 20:02 | Permalink

    Clearly, some readers have not understood the article. It addresses the issue of investing in “offshore funds”. This means, in the case of UK investors, non-UK funds, such as Cayman, Ireland, Luxembourg, etc. The main point is that the fund itself is not taxed on the income and capital gains. The investor is liable for the tax in his home country (in this case, the UK) for all income and realized capital gains. The companies in which the fund invests are of course taxable like all companies in the UK. The issue of UK investors investing in an offshore fund and not declaring any income or capital gains to HMRC is now a moot point as the Common Reporting Standard is now widely implemented around the world. This standard developed by the OECD provides for the automatic sharing of tax information amongst countries. There are complex rules related to trusts, companies and other structures, but for the average UK-domiciled investor, these structures are generally ineffective in avoiding tax. Outright tax evasion is illegal with very severe penalties. Tax avoidance runs from what the HMRC calls “abuse” and there is a rule now applied preventing this to legitimate tax planning utilizing various reliefs offered under the legislation (personal exemption, ISA, pensions, etc). Going back to the point of the article, if countries force other territories to tax investment funds in their own right, then investors will simply invest directly in the companies, government debt, commodities etc. Not a single penny of extra tax will be collected. The investor would still pay on income received and capital gains realised and the target companies would still pay corporation tax. The effect would be to make investments much more cumbersome and inefficient, reducing the rate of return for all cross-border investors. Therefore it is better to have so-called “offshore funds” as they have a net beneficial effect on the economy and investors, including the man on the street with a pension.

  14. Posted 16/11/2017 at 10:40 | Permalink

    Thanks for that comment Christopher. Brought me down below boiling point again.

  15. Posted 19/11/2017 at 20:23 | Permalink

    Question: I realize this is geared toward a UK audience and is about UK laws. Are there no pass through entities in the UK? That seems kind of crazy to me, but I don’t know.

    In the US, we have LLCs, LLPs, Partnerships, Sole Proprietorships, and S-Corps, where you can pass through income to the owners’ personal tax returns. I think only C-corps, which includes basically all publicly traded companies, and very few privately held companies, are taxed on corporate profits at the entity level.

    Why then, would anyone in a jurisdiction with pass through entities, use one of these offshore accounts. Isn’t it the case, that many, probably the majority of these investors, have other pass through options in their home jurisdictions? Why go to the trouble of the offshore account?

  16. Posted 23/05/2019 at 10:23 | Permalink

    In response to Alex: yes there are pass through entities in the UK, LPs and LLPs. Indeed the LP is the structure adopted by the majority of onshore private equity and hedge funds.

    The author is either woefully misinformed or being disingenuous when he writes:

    “if the investment fund were a UK company, rather than being based in the Caribbean, it would be taxable. Investing through a fund would therefore add a 19% tax charge onto much of the investment income, even though the fund isn’t a real person, it is just a way for the investors to have their capital managed.”

    If a fund were to move onshore it would be constituted as an English (or Scottish) LP. Investors would be subject to tax in their own jurisdiction in exactly the same fashion as if they were off shore – it would not add a 19% tax charge. It’s frankly embarrassing that a Senior Lecturer in Taxation is this misinformed on UK fund vehicles.

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