Purple Pay Limited - HMRC named tax avoidance scheme

Purple Pay Limited

  • 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.”

Purple Pay Limited – more details

The HMRC website states the scheme operates as follows:

  1. The user enters into a contract of employment with PPL. This contract provides that the users wages will be at the applicable national minimum wage (or, if applicable, the National Living Wage) rate, unless the employee assignment schedule states otherwise.
  2. The user enters into a second agreement called the Employee cash flow facility. This is essentially a loan between the user and PPL and allows PPL to provide unsecured advances to the user.
  3. PPL enter into a contract for services with end users.
  4. The user enters into a Co-ownership (Co-op) agreement with PPL and the trustee of the Purple Pay employee share ownership trust. As part of this agreement, the user is said to acquire a joint interest in shares of PPL.
  5. PPL pay the user wages at the national minimum wage or national living wage. This payment is taxed under PAYE.
  6. PPL pay advances to the user as per the employee cash flow facility. These payments are not taxed under PAYE.
  7. The user disposes of their joint interest in shares acquired under the Co-ownership (Co-op) agreement and any dividend, distribution or proceeds of sale in relation to this joint interest is said to pay off the advance payments the user received from PPL (as written into the terms of the Co-ownership (Co-Op) agreement and employee cash flow facility).
  8. The user is subject to capital gains tax on any increase in value of their shareholding.

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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