In an online corporate report (‘Current list of named tax avoidance schemes, promoters, enablers and suppliers’), HMRC named and shamed three tax avoidance schemes. While three isn’t many, it’s a start. Keep reading for more information, including the warning signs of a tax avoidance scheme and what you should do if you think you’ve engaged with one for your payroll.
Which companies have been named and shamed by HMRC?
In a post updated on 8th June 2022, HMRC says they may post information about “tax avoidance schemes, promoters, enablers and suppliers” where they have:
- Issued a Scheme Reference Number (SRN) to the tax avoidance scheme – under the Disclosure of Tax Avoidance Scheme (DOTAS)
- Given the promoter company a stop notice – Promoters of Tax Avoidance Schemes (POTAS)
- Handed out a penalty to tax avoidance enablers – Enablers of Tax Avoidance (Enablers)
With the above in mind, a separate corporate report has named three tax avoidance schemes HMRC has identified marketing at UK workers (below).
- Promotor of Scheme: Absolute Outsourcing Limited (AOL)
- Address: Fernhills House, Foerster Chambers, Todd Street, Bury, Greater Manchester, BL9 5BJ
- Publication Date: 7 April 2022
- Scheme Reference Number (SRN) and date it was allocated: 45474323, 15 December 2021
- HMRC’s Scheme Description: “The users completed an advance deed along with their employment contract. This advance deed is intended to justify the user receiving non taxable advance payments along with a National Minimum Wage salary. The aggregate payments amount to around 82% of their gross contract earnings.”
Equity Participation Scheme (EPS)
- Promotor of Scheme: Purple Pay Limited (PPL)
- Address: 70 Gracechurch Street, London, EC3V 0HR
- Publication Date: 7 April 2022
- Scheme Reference Number (SRN) and date it was allocated: 03817064, 1 February 2022
- HMRC’s Scheme Description: “PPL invoice and receive payment from the end user. PPL pay the user around 5% of this amount as wages which is taxed under Pay As You Earn (PAYE). PPL pay around 75% of this amount as an advance to the user under the employee cash flow facility. This amount is not taxed under PAYE. PPL retain around 20% of the amount as their fee.”
Peak PAYE Limited
- Promotor of Scheme: Peak PAYE Limited (PEAK)
- Address: 86-90 Paul Street, London, EC2A 4NE
- Publication Date: 8 June 2022
- Scheme Reference Number (SRN) and date it was allocated: 20510783, 7 February 2022
- HMRC’s Scheme Description: “Users enter into an Agreement to Grant an Option, called the Option Grant Agreement with PEAK. After the payment of National Minimum Wage (NMW), PEAK pays the balance to the user as payment for the grant of an option. These are paid in one aggregate payment. This secondary element of the payment as shown on the Option Grant note is not subject to deductions of tax and National Insurance Contributions (NICs). The aggregate payments amount to around 80-85% of the expected gross contract earnings.”
Do these companies deserve to be named and shamed?
Absolutely! Any company that encourages and allows temporary workers to avoid paying tax should not be allowed to operate. Hopefully, with HMRC happy to name and shame, this will deter other unethical payroll companies and promoters from targeting the UK’s contractor and freelancer workforce.
What should you do if you think you’re using a tax avoidance scheme?
If you are being paid by Absolute Outsourcing, Purple Pay or Peak PAYE, or you have been paid by one in the past, you should contact HMRC at your earliest convenience to settle your tax affairs. You might owe money to the tax man, and it’s in your interests to contact HMRC now rather than wait for them to contact you in the future. This applies to all tax avoidance schemes, not just the three listed above.
What are the classic signs of a tax avoidance scheme?
There are plenty of characteristics of a tax avoidances scheme that you should be aware of. Most tax avoidance schemes will:
- Promote the opportunity to pay less tax
- Not operate PAYE (Pay As You Earn)
- Process payments in unusual ways – perhaps with loans, credits, shares, etc.
- Be located offshore, perhaps in a known tax haven such as the Cayman Islands or Channel Islands
- Have a short trading history
- Not have many online reviews
- Have a very basic website without much information
- Be difficult to get in contact with over the phone
For more information about tax avoidance schemes and the dangers of engaging with one, please visit the following content on the umbrellacompanies.org.uk website.
- Tax Avoidance Schemes
- HMRC Issue Warning In New Corporate Report Covering Marketed Tax Avoidance Schemes – “Please Be Vigilant”
- Umbrella Company Examples – The Difference Between A Compliant Umbrella And Tax Avoidance Scheme
- New Government Guidance Sets Out To Help You Identify “If You Are At Risk Of Tax Avoidance”
- What Is The Difference Between A Compliant Umbrella Company And A Tax Avoidance Scheme?
- The Warning Signs Of A Tax Avoidance Scheme
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