‘Farcical loophole’ sees tax avoidance schemes removed from HMRC’s list

Different time limits for scheme referrals mean some offenders removed from HMRC’s official list

HMRC is under the spotlight for removing two identified tax avoidance schemes from its list of known offenders, in a move that industry experts argue leaves self-employed workers at risk.

The two schemes – Absolute Outsourcing and Equity Participation Scheme – were both promoted by Purple Pay Limited (PPL). 

However, they have been removed from HMRC’s list of named tax avoidance schemes. According to guidance on, there are different time limits for how long information about a scheme can remain in the public domain, depending on how it is reported to HMRC.

Under the Disclosure of Tax Avoidance Scheme (DOTAS) rules, where a promoter or other individual has referred the scheme to HMRC, “there is no time limit for how long information published can remain on the list”. 

However, where a suspected scheme hasn’t been referred by either its promoter or another individual – but instead has been provisionally designated by HMRC – the rules are different. Instead, “information about a promoter or supplier will be held on GOV.UK for a maximum of 12 months”.

As well as reducing transparency, the removal of schemes from the list is at odds with the government’s promise to impose harsher sanctions on tax fraud, as announced at the Spring Budget.


“A farcical loophole”

Industry experts have criticised the removal of schemes from the list, suggesting that it makes it harder for self-employed workers to identify and avoid tax avoidance schemes.

Julia Kermode, the founder of IWORK, called it “particularly ridiculous” and asked, “how can anyone steer clear of tax avoidance schemes when HMRC’s own list isn’t up to date?”

“Naming a tax avoidance scheme only to delete it from an official list a year later is crazy”, she continued. “It’s beyond belief. This list isn’t a deterrent for tax avoidance schemes.”

“These schemes wreck lives. They lure in unsuspecting individuals upon the pretence that they are legal and compliant. Then, when HMRC comes calling, the individual is left with a devastating tax bill. Meanwhile, the scheme, along with the people running it, have disappeared into thin air.”

Similarly, Fred Dures – founder of PayePass, a payroll auditor – said the removal of the two schemes from the list “would be laughable if it wasn’t so serious”.

“As it stands, the government’s list of tax avoidance schemes is only the tip of the iceberg. Now we find out that due to an absurd piece of legislation, one year on from a scheme being identified, it’s removed from the list.”

He also called the move “appalling”, and said HMRC’s approach to tax avoidance was a case of “one step forward, two steps back”.


Continued failure to regulate industry

Despite having made fresh promises to regulate the umbrella sector, no action has been taken as of yet. 

The creation of a Single Enforcement Body (SEB) would introduce regulatory oversight to the umbrella industry, which is not currently covered by the remit of any of the three bodies enforcing compliance.

Messaging from the government has been inconsistent, however. Late last year, Grant Shapps – the former Secretary of State for the Department of Business, Energy and Industrial Strategy – indicated that plans introduce the SEB had been shelved.

In March this year, though, a report by the Director of Labour Market Enforcement, was made available by the government, which restates its support for the Single Enforcement Body.

‘Disguised remuneration’ schemes are a type of tax avoidance scheme, and these have left many contractors with large retrospective bills. 

The Loan Charge was introduced to recover taxes from contractors involved in such schemes, rather than the scheme operators. 

HMRC has been heavily criticised for its approach to recovering these taxes, which has left contractors with unpayable bills and causing severe distress. In some cases, this had tragic consequences, with ten suicides linked to the Loan Charge policy.

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