HMRC continues to warn about avoidance schemes and have added another name to their published list – Purity Ltd.
If you are you using this umbrella company? Get in touch with HMRC so they can provide help to exit
How the scheme claimed to work
Purity Ltd (‘Purity’) employees provide their services to an end client via a recruitment agency. The recruitment agency pays Purity for the work done by the employees. Purity then makes two payments to the employees.
The first payment, a salary at the National Minimum Wage or National Living Wage rate, described on bank statements as ‘Purity Salary’ is made with Income Tax and National Insurance contributions (NICs) deducted.
The second payment, described on bank statements as ‘Purity Adv’ is made without Income Tax and NICs deducted.
So what’s wrong with that?
HMRC’s position is that the untaxed payment described on bank statements as ‘Purity Adv’ is normal income, and Income Tax and NICs are payable on it.
HMRC have previously published information about the tax avoidance arrangements used by some umbrella companies Spotlight 60. HMRC are aware that some Umbrella Companies operate more than one scheme, for example, a standard compliant scheme and a non-compliant scheme.
HMRC advise employees of Purity to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income.
Report a tax avoidance scheme to HMRC
You can report tax avoidance schemes and those offering you the schemes to HMRC. You can do this by using the report tax fraud or avoidance online service.
You can submit this form anonymously. You do not have to give your name, address or email.
If you cannot use the online form, you can contact HMRC.
If you’re involved in a tax avoidance scheme
If you’re worried about becoming involved in a tax avoidance scheme, or think you’re already involved and want to get out of one, HMRC say they are here to help.
If you’re using this scheme any or similar, HMRCstrongly advises you to withdraw from them and settle your tax affairs to prevent building up a large tax bill.
If you’re already speaking to someone in HMRC about your use of a tax avoidance scheme, you should contact them to discuss this further.
If you do not have an HMRC contact and you want to get out of a tax avoidance scheme, contact HMRC.
Named tax avoidance schemes, promoters, enablers and suppliers
PAYadvice.UK 26/1/2024
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