TAX. Let’s get straight to the point. It is a subject that is not only on a lot of your minds at the moment but is also, in the grand scheme of things VERY important to get on the right side of.
Are you Superyacht crew, British and have some concerns about one or more of the following?
1. Your tax status
2. Residential status
3. How you file your taxes
4. If you can get away with not declaring your income
5. How property, banking, investments etc relate to tax
6. How all of the above affects your life.
If you do not know the answer to any of the above you NEED to do something about this. NOW
OK, I’m a bit worried. What do I do?
This article is not intended to scare anyone into taking action. It has been written to make sure as many of you as possible are aware that you need to do something about this. Gone are the days where you could hide behind declaring yourself non-resident and banking offshore. If you don’t declare your income there will come a point in the not too distant future where you will be approached by the tax man. You do not want this to happen as it means they have found out about you before you have told them yourself. This means potential fines.
Let’s go back to the beginning.
Over the last few years the main countries around the world where SuperYacht crew come from (UK, AUS, NZ, SA, USA) have started to adopt a very similar attitude towards tax and tax evasion. This is not in any way limited to Yachting, it just so happens that the Yachting industry has always been synonymous with offshore banking and jurisdictional tax issues. The tax authorities of the world are making a conscious effort to crack down on tax evasion and as a result the Offshore Disclosures Facility was introduced. You can read more about this here as it is very likely it will affect you.
What if I do nothing?
By now I hope you have realised that “doing nothing” is not the answer. You HAVE TO do something otherwise this could get expensive. So, where do you start? Let’s deal with the questions above in order:
1. How do you find out your tax status?
This is simple in most cases but you need to understand that most countries have slightly different rules and these in turn may affect you in different ways. For example, in the UK as a seafarer you can do a tax return, declare your income every year and not be required to pay tax. Therefore you are a tax payer, completely legal and in the system.
2. Your residential status
This has a bearing in a lot of cases as to whether you should be declaring your income. This varies from country to country and so is best dealt with on an individual basis.
3. How you file your taxes/ declare your income.
For most of you this is a black and white area. You either declare your income or you don’t. If you do this is great. If you do not are you clear on whether there are any consequences to this? “I don’t know” is not a good enough answer. Get some advice here. Contact us by clicking here if you need help.
4. Can I get away with not declaring?
The answer to this in most cases is NO. There are a great deal of people who come up with all sorts of ideas and plans to help them pay less tax. Set up a Cayman company and pay yourself from this, split your income between various bank accounts to limit your liability etc etc. These are all illegal and under no circumstances should you even attempt this. You will find yourself in a huge amount of trouble very quickly and will more than likely be charged with tax evasion and possibly fraud. Here is a simple rule to follow: If you are required to pay tax, pay it. UK crew are in a very fortunate position of being able to file a tax return and (normally) not having to pay tax.
5. How do property, banking and investments affect tax?
Where you own property can have a huge and sometimes expensive affect on your tax situation. Your bank account can be a help or hindrance. If you bank offshore and do not declare your income if required to do so your offshore bank can essentially declare for you. Banking will not cause you a direct problem but there are benefits to grouping certain things together. Here’s another example; You are British, you declare your income and file your tax returns. Banking in the UK can be a massive benefit to you when it comes to credit rating, financial footprint, and ultimately the ability to borrow (get a mortgage). All these things are linked remember. Investments can also cause you a tax liability so be sure your wealth manager or financial adviser is aware of your tax situation before you commit to specific investments.
6. How does all this affect my life?
ALL of the above will affect your life as Superyacht Crew if you do not do the right thing. There are fewer and fewer countries in the world where you are not required to declare your income and pay whatever tax is due. Our advice to you is the following;
Find out your position. Are you supposed to be doing something? The answer is more than likely YES.
If you are supposed to be doing something. DO IT
Don’t put it off!
Make sure that, no matter what you are on the right and legal side of the tax authority. Paying tax if you have to may seem expensive now but it is nothing compared with how much it will cost if you get caught not paying what you owe.
Once you are in the right position make sure you know what you have to do to stay in that position. DO NOT do anything that will compromise this as it will be expensive.
And finally. DO NOT, and I really mean this DO NOT DO NOTHING. This will not solve a problem or make it any easier to deal with.
CrewFO was set up specifically to assist Yacht crew with the difficult things in life like tax. If you have red this article and are not sure what to do next, get in touch or go to www.crewfo.com