HMRC’s new crackdown on tax avoidance scheme: everything you need to know

HMRC has showed a renewed determination to tackle contractor payment schemes that don’t comply with UK law.

In August it shared a warning to agency workers and contractors employed by umbrella companies, which you can read in full here.

Individuals that are caught using tax avoidance schemes are liable to pay large fines, as well as any tax that HMRC thinks is unpaid.

HMCR is issuing a £1 million fine to an umbrella provider called Hyrax Resourcing Ltd that has been promoting a tax avoidance scheme.

How did this scheme work?  

The scheme paid contractors the National Minimum Wage and the rest of their earnings through loans. The loans were not declared as income, therefore scheme users did not pay tax on all their total earnings.

If this scheme sounds familiar to the way you get paid through your umbrella provider, you should move to a compliant umbrella company as soon as possible and anonymously report the tax avoidance scheme to HMCR.

Signs you are at risk of being involved in tax avoidance

• Your payslip and the amount you’ve been paid don’t match up
• The umbrella company offers additional take-home pay
• Terms and conditions are nowhere to be seen on your contract

For a more detailed advice on how to spot an umbrella tax scheme, read this blog.

As a contractor, it is vital that you only use umbrella providers that are accredited, meaning that they comply with all HMRC policies.

Mint Umbrella is accredited by Professional Passport so get in touch and join us today!