Absolute Outsourcing Limited - HMRC named tax avoidance scheme

Absolute Outsourcing Limited

  • 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 (summary): “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.”

Absolute Outsourcing Limited – more details

The HMRC website states the scheme operates as follows:

  1. The users enter into an employment contract with Absolute Outsourcing Limited (AOL). The employment contract stipulates that the employee will work on client assignments and in so doing will be become an employee of AOL. In relation to payment, it states that AOL will pay the employee at a rate equivalent to the National Minimum Wage rate.
  2. At the same time the users enter into a loan agreement with AOL (‘Advance Deed’). The Advance Deed provides that AOL, as the employer, will make an initial advance of up to £5,000 and further advances to the employee as the employer may think fit (‘Advance Payments’). The Advance Payments are repayable within 18 months after receipt of the initial advance or earlier if the employee terminates the arrangement or breaches the agreement.
  3. Once the users are employees of AOL, they are then required to forward timesheets to AOL using a portal for this purpose. AOL then invoices the recruitment agency or end user for the services carried out by the users based on the hours worked and the appropriate hourly rate. Once AOL receives the funds for the services carried out, they then process the next step of the arrangements.
  4. AOL then arranges for the users to be paid for the hours worked in line with the National Minimum Wage hourly rate. This is confirmed by the payslips and the bank statements of the recipients.
  5. AOL withholds and retains as its fee a percentage amount, being between 18% and 20% of the amount invoiced to the recruitment agency or end user for the services carried out by the users (the gross contract value). The remaining balance makes up the Advance Payment with an advance advice note confirming the amount to the user.
  6. AOL arranges for the user to receive the Advance Payment. These payments are evidenced by the users’ bank statements which show one aggregate payment in accordance with the net salary per the payroll and Advance Payment. The Advance Payments that AOL makes to the users are claimed not to be subject to income tax or National Insurance Contributions (NICs).

For more information, visit the following page on the government’s website: Current list of named tax avoidance schemes, promoters, enablers and suppliers.

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