Over the last six months or so we have been doing our best to make Crew in the Superyacht industry aware of their responsibilities and liabilities when it comes to tax, offshore income and ensuring you are on the right side of the tax man. Today it is specifically the turn of UK Superyacht crew.
If you are British and work on a yacht believe it or not you are the envy of every other nationality in Yachting. Hopefully most of you UK crew understand why but for those of you who don’t, and honestly it is a surprisingly large number please read on, learn something and take action before it gets you in trouble for absolutely no reason.
Let’s go back a few years. When I started in yachting the advice I got was;
Open an offshore account
Get paid into your offshore account
Keep your money hidden there
Do your best not to exist
This has long been the attitude to earning and paying tax for two reasons;
1. Everyone thought they were supposed to pay tax and so, with the benefit of offshore banks did their best to hide their earnings
2. You did it because everyone else did.
The reality of the situation, as I found out to my surprise many years later was that I did all that hiding for nothing. I never had a tax liability and so would have been just as well off if I had declared all my income. Working offshore as a UK resident (as long as you stay within the guidelines) carries with it zero tax penalties.
Therefore, during my time in yachting I may have saved some money and made some investments but, due to spending quite a few years banking offshore and hiding my income I ended up with a really bad credit rating, difficulty getting a mortgage, and had to start from scratch when I came home to the UK. ALL FOR NOTHING
We have talked to a lot of Yacht crew this year and although a lot of AUS and NZ crew are joining us and asking for advice at the moment the largest percentage of our members is still British crew. Everyone we talk to who is new to the industry seems to take on board what we say and we have a large amount of crew doing their first tax returns as yacht crew right now.
The tax situation for other nationalities is complicated and confusing and as a result we talk to a lot of international crew who wish their situation was a simple as the British. Therefore, UK crew take note. You do not realise how good you have things.
What I need you to understand is split into two groups, the pros and cons of declaring your income and the pros and cons of not declaring your income. So here we go.
Declaring your income:
You are in the system
You will not be required to pay tax (assuming you do not spend too much time in the UK)
You have proof of earnings (essential for mortgages and loans these days)
You will build your credit rating
No concerns about the tax man knocking on your door
It sets you up for the future
A tax return will cost you around £200 per year
You need to keep records of time in and out of the country
Not declaring your income:
You do not pay tax
You do not pay to do a tax return
You save £200 per year
You will get caught
When you do get caught you will be fined
When you get caught you could be charged with tax evasion (by not declaring your income it will be assumed you have something to hide) and end up with a criminal record.
No financial footprint in the UK
Poor credit rating
Worry about the tax man catching up with you (he will by the way!)
Hopefully by now you can see where we are going with this but to make it as plain as I possibly can below are the main points;
UK crew who spend 6 months or more out of the country will not be liable for income tax
You do still need to declare and file a tax return in order for this to be confirmed.
If you have been in Yachting since before April 2015 you should be in the process of filing a tax return
You are no longer able to hide your money in an offshore bank anymore. After December this year the Tax man will receive information about you from your bank.
There is quite literally no negative to declaring your income and filing a tax return.
If you are not doing this by the end of this year you WILL be caught and fined but possibly much worse
“I didn’t know I was supposed to” will not work as an excuse
The benefits to declaring and filing are huge and the only cost is the price of the tax return.
If you do not declare your income and file a tax return it will be assumed you have something to hide and you could be charged with tax evasion.
Now is the time to act. We talk to a lot of people each week and it constantly surprises me that despite discussing the pros and cons which you have read above so many crew choose not to do anything.
I still strongly believe that a lot of you think the worst could never happen to you or that the whole tax thing is a bit of a joke. What you probably don’t realise is that more and more crew are taking this very seriously. Lots of crew are now being fined or investigated for back tax and tax evasion, and even crew such as Australians and Americans who know they will have to pay tax are choosing to declare. So ask yourself this; If you can declare, do a tax return and it still not cost you anything why are you still sitting there not doing anything?
There is no safe option anymore, you either do this or you will be breaking the law.
Get in touch. We are always happy to try and explain this another way if it still isn’t clear, or we can get on with taking care of this for you. It is quite literally 20 minutes work for you and it is done.
Go to www.crewfo.com for more info or email us at firstname.lastname@example.org