HMRC has used new powers to name tax avoidance schemes and their promoters for the first time.

The move is part of a campaign to warn people not to get caught up in tax avoidance.

The tax body is urging anyone involved in the schemes to leave them as soon as they can to prevent building up a large tax bill.

Which tax avoidance schemes have been named?

The two named schemes are:

  • Absolute Outsourcing, of Foerster Chambers, Todd Street, Bury, Greater Manchester
  • Equity Participation Scheme (EPS), promoted by Purple Pay Limited (PPL), of Gracechurch Street, London

Both schemes involve individuals agreeing an employment contract and working as a contractor. The schemes pay contractors the National Minimum Wage, with the rest of their wage paid through a loan to try to avoid National Insurance and income tax.

Be vigilant

Mary Aiston, Director of Counter Avoidance at HMRC, said: “These schemes are cynically marketed as clever ways to pay less tax. The truth is they rarely work in the way the promoters claim and it’s the users that end up with big tax bills.

“New legal powers allow us to name promoters and the schemes they peddle much faster, and this announcement is just the first step. But we need the public to be vigilant, and that’s why we’re also helping people identify, and steer clear, of these schemes through our Tax Avoidance – Don’t Get Caught Out campaign.”

HMRC set to name other tax avoidance schemes

As well as the two schemes named above, there are other schemes, promoters, enablers, and suppliers that remain active. HMRC will regularly update its list with these details.

But if a scheme isn’t in the list, you shouldn’t assume it works or is approved by the tax body.

What other help is available?

You can use HMRC’s interactive risk checker and payslip guidance to help you steer clear of tax avoidance schemes. And if you think you could be involved in such a scheme, you should call them on 03000 534 226.

Or, if you’ve been encouraged to get into a tax avoidance scheme, have come into contact with someone selling such schemes, or become aware of one, you can report it in confidence through HMRC’s online form.

Our thoughts on tax avoidance

HMRC has made a concerted effort over the last few years to close tax avoidance schemes.

At one time, schemes that “claimed” to take away a taxpayer’s liability using engineered methods were the norm. But the world has moved on, and it’s now highly unlikely any scheme that is highly engineered will be successful in the courts.

So, it’s important for you to be aware of the major risks of getting involved in such schemes. In the worst-case scenario, you’ll face hefty bills for professional fees, tax and interest – and possibly penalties.

At Churchill Taxation, our team of experienced tax advisers can help you make sense of the ever-evolving world of UK tax. Call us today on 07813 434195 or email stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation