HMRC have added Blizzard Pay Ltd (BPL) to their named list of tax avoidance scheme promoters.
So how did Blizzard claim to work?
Individuals within the Blizzard Umbrella provided services to end clients as employees of BPL.
Employees receive part of their BPL remuneration at a rate close to the National Minimum Wage or National Living Wage which is subjected to deductions for Income Tax and National Insurance Contributions (NICs).
Employees then receive the balance of their remuneration without the deduction of Income Tax or NICs.
HMRCs view of the BPL scheme
HMRC’s view is that both elements of the employees’ pay are employment income, and therefore subject to Income Tax and NICs. HMRC have previously published Spotlight 60 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, such as. a standard compliant scheme and a non-compliant scheme. HRM advise employees of BPL to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income.
Umbrella companies – understand how they work
If you’re a contractor, you may be employed through an ‘umbrella company’. If you’re not sure, it’s best to check as some umbrella companies try to break the tax rules.
You may be at risk. But if you understand how umbrella companies work, you can take steps to avoid these risks.
Read the HMRC guide to what it’s like to work through an umbrella company and how you’ll be paid.
PAYadvice.UK 29/7/2024