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HMRC Naming and Shaming Tax Avoidance Schemes

HMRC have begun using new powers to name tax avoidance schemes in a bid to protect umbrella workers

HMRC has just used its new legal powers to name tax avoidance schemes and their promoters for the first time, as the net tightens around non-compliant umbrella companies. 

Protecting umbrella workers

HMRC have recently named two tax avoidance schemes, to help protect workers who might be tempted by these schemes who advertise lower rates of income tax. 

Absolute Outsourcing and Purple Pay Limited’s Equity Participation Scheme have been identified under DOTAS (Disclosure of Tax Avoidance Schemes), the first to be named as part of new measures by HMRC. 

The new HMRC list names schemes which lure contractors with the promise of paying less tax, by paying them the National Minimum Wage, with the remainder of their wage paid through a “loan” to help them avoid National Insurance and Income Tax.

HMRC have advised anyone working under the schemes to withdraw immediately to avoid being caught by a large tax bill.

Tax Avoidance – Don’t Get Caught Out

Naming tax avoidance promoters is part of the HMRC’s Tax Avoidance – Don’t Get Caught Out campaign, which is designed to protect contractors from umbrella schemes which facilitate and encourage tax avoidance. They are hoping that by listing the names of these schemes, contractors will avoid them or leave them if they are already involved. The list will be updated regularly.

Other tools which have been provided by HMRC to help contractors include an interactive risk checker and payslip guidance. 

Promoters and enablers also in the hot seat

HMRC will also add to its list with POTAS (Promoters of Tax Avoidance Schemes) and Enablers of Tax Avoidance schemes. These parts of the list are currently empty but are expected to grow quickly as more schemes are identified. 

There is no time limit for how long a tax avoidance scheme can remain on the list, when a promoter or other person has notified the scheme. If not, the information can be held on the system for a maximum of 12 months.

Not on the list? It doesn’t mean it’s safe

HMRC is quick to point out that their list of tax avoidance schemes is not exhaustive, just because a scheme does not appear on the list doesn’t mean it’s safe to work with them. There are other schemes or promoters and enablers of schemes, who will be added in due course.

HMRC has also appealed to people to fill out an online form to report if they have been involved in a tax avoidance scheme, or if they have been approached by a tax avoidance promoter or enabler. 

JMK is proud to lead the way as a compliant umbrella company providing a useful and transparent service to its contractors and clients. If you would like any further information or guidance about how income tax and national insurance is calculated as a contractor, JMK are here to help.

HOW JMK CAN HELP YOU

Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions. 

We have evolved to provide a range of expert services; such as Back Office Support (BOS) or Funding, becoming a leading provider to the contracting industry.

We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.

With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.

Have a look at the wide range of services our Back Office Support (BOS) or Funding can provide to you and your business, it is far more than just payroll and finance.

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