HMRC has updated it pages with the latest addition to the ‘Current list of named tax avoidance schemes, promoters, enablers and suppliers’ section.
The law allows HMRC to publish information about promoters, enablers and suppliers of tax avoidance arrangements under the publishing legislation included in Finance Act 2022 (the ‘2022 legislation’), and under the following regimes:
- Promoters of Tax Avoidance Schemes (POTAS)
- Disclosure of Tax Avoidance Schemes (DOTAS)
- Enablers of Tax Avoidance (Enablers)
The following have been added over this past month:
Abchurch Ltd was named on 29th February 2024
Individuals provide services to end clients as employees of Abchurch Ltd. Employees receive part of their Abchurch Ltd remuneration at a rate close to the National Minimum Wage or National Living Wage with Income Tax and National Insurance contributions (NICs) deducted. Employees receive the balance of their remuneration, disguised as a loan, credit, or other payment without Income Tax or NICsdeducted.
It is HMRC’s view that all remuneration paid to employees of Abchurch Ltd is taxable. HMRC has previously published Spotlight 60 on Disguised remuneration schemes involving agency workers and contractors employed by umbrella companies. HMRC is aware that some Umbrella Companies operate more than one scheme, for example, a standard compliant scheme and a non-compliant scheme. HMRCadvises employees of Abchurch Ltd to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income.
Canopaye Limited were named in 23rd February 2024
The arrangements involve users providing their services to end clients through Canopaye Limited (CL). The users also sign an agreement that sees the users grant CL an option on an Annuity Agreement. The result is the remuneration for their services is artificially separated into a salary and payments said to be in return for the option. No tax or National Insurance contributions are deducted in relation to the payments for the option.
HMRC have previously published Spotlight 35 on disguised remuneration schemes involving annuity agreements based on a similar scheme.
Contractor Bureau Limited was named on 14th March 2024.
Scheme Users are employed by Contractor Bureau Limited (CBL) and provide services to end clients. Users take part in a Bonus Arrangement and CBL pay advances to users on the bonus pot. Users then receive payment from CBL which consists of two elements.
The first element is a salary with tax and National Insurance contributions (NICs) deducted, and the second element is an ‘advance’ without tax and NICs deducted. CBL claim that the advances are repaid wholly or partly, as bonus payments are made at some time in the future.
It is HMRC’s view the salary and advances paid to employees of CBL should be subject to tax and NICs. HMRC have previously published Spotlight 60guidance for agency workers and contractors employed by umbrella companies.
Flex Payroll and Accounting Services Ltd were named on 1st February 2024
Flex Payroll and Accounting Services Ltd (Flex PAS) enters into a contract of employment with scheme users. The scheme users provide their services to the ‘end client’ and Flex PAS then invoice the end client for those services. Flex PAS pays an amount to the scheme users equivalent to the National Minimum Wage or National Living Wage with Income Tax and National Insurance contributions (NICs) deducted. Flex PAS also makes a second payment to the scheme user, described as an ‘advance payment’, with no Income Tax and NICs deducted.
HMRC has previously published Spotlight 60 about the tax avoidance used by some umbrella companies. HMRC is aware that some Umbrella Companies operate more than one scheme, for example a standard compliant scheme and a non-compliant scheme. The Flex PASwebsite advertises its services to Doctors, Nurses and Social Workers in the public sector. HMRC advises employees of Flex PAS to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income
Paystone Services Limited were named on 1st February 2024
Paystone Services Limited (PSL) pay scheme users a salary, which is approximately at the National Minimum Wage or National Living Wage rate, with tax and National Insurance contributions (NICs) deducted. However, they also receive a secondary payment without deduction of tax and NICs. This may be labelled as ‘Share payment’, ‘Option payment’ or something else. The secondary payment is the remaining balance of their contractual payment for the work carried out, minus a fee that PSL deduct for the operation of the scheme.
The scheme is targeted predominantly at workers within health, tech and energy sectors. Those in health, include doctors, nurses, speech therapists and podiatrists. HMRC do not accept these arrangements work as claimed. Tax and NICs should be accounted for on both payments under PAYE as they are made in respect of work carried out by the scheme user. It is HMRC’s view that the two payment arrangements are set up purely to facilitate a disguised remuneration tax avoidance scheme. HMRC is aware that some umbrella companies operate more than one scheme, for example a standard compliant scheme and a non-compliant schemes. HMRC advise employees of PSL to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income
Procorre LLP were named on 29th February 2024
A complex tax avoidance scheme that moves income offshore. Scheme users and their personal service companies (PSCs) join and become members in Procorre LLP (Procorre). The PSC’s then enter into contracts to provide the services of the scheme users to end clients. The PSC’s invoices the end clients [on behalf of Proccore] and transfer the income received to Procorre. Procorrereturn the income to the PSC’s and the users after deducting a fee. The income is returned via direct payment to the PSC’s bank accounts, and in the form of untaxed drawings, pre-paid expense cards and business development fund payments all provided by Procorre.
It is HMRC’s view that the drawings, pre-paid expense cards and business development fund payments received by users represent the rewards for their services provided to end clients and should therefore be subject to Income Tax and National Insurance contributions.
HMRC have previously issued a Spotlight on Disguised Renumeration Asset Transfer Arrangements intended to avoid the loan charge. The individuals named are connected persons due to their control over the LLP. Mr Patrick-Green is the Ultimate Beneficial Owner of Corre Holdings SA (CHSA). CHSA is a designated member and majority owner of the LLP. HMRC also suspect that CHSA are involved in moving Users to a further set of arrangements which involve the acquisition of their PSC.
React Administration Services Limited were named on 29th February 2024
The scheme user enters an employment contract with React Administration Services Limited (RASL) and provides their services to an end client. RASL then makes a single payment to the scheme user for their services, but this is artificially separated into two elements. The first element is a salary paid at or around National Minimum Wage or National Living Wage with tax and National Insurance contributions (NICs) deducted. The secondary element is described as a ‘propelled payment’ with no tax and NICs deducted.
HMRC’s view is that both elements of the payment should be treated as ‘normal income/as the user’s salary’, and therefore subject to tax and NICs. HMRC have previously published Spotlight 60 guidance on Disguised remuneration schemes involving agency workers and contractors employed by umbrella companies. 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 RASL to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income.
If you’re involved in a tax avoidance scheme
If you’re using any of the schemes shown on the full list or similar schemes, HMRC strongly 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 HMRCabout 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.
PAYadvice.UK 17/3/2024