Four new tax avoidance schemes identified by HMRC in July

The Chancellor has also set out plans for greater tax compliance, alongside commitment to establish the long-awaited Single Enforcement Body

HMRC has named as many as four new tax avoidance schemes in July, with flexible workers warned once more of the tax avoidance risks that exist within the unregulated umbrella sector.

Three of the schemes were added to the list on the 18th July and the fourth was added on 25th July:

• Blizzard Pay Ltd (Wenlock Road, London, N1 7GU)
• B2BTradecard Ltd (Euxton Lane, Chorley, PR7 6TE)
• New Mill Resourcing Ltd (Great Portland Street, London, England, W1W 7LT)
• Umbrella Zone Limited (Thames Street, Windsor, SL4 1TX)

Following the publication of these schemes, umbrella workers are being urged to contact HMRC “as soon as possible” if they believe they may be involved in tax avoidance.

The addition of these schemes at the start of the new Labour government’s parliamentary term highlights the need for greater compliance enforcement – something promised in a speech by the Chancellor, Rachel Reeves, delivered on Monday 29th July.

The party has also said it will establish the long-awaited Single Enforcement Body to oversee compliance and ensure greater protections for workers.

Chancellor promises increased tax compliance activity

Alongside greater tax compliance enforcement, Reeves used her speech to launch the findings of a public spending audit, revealing a £22bn deficit in the Treasury’s budget for the 2024/25 financial year.

Following the announcement, the Chancellor set out measures designed to rein in public spending, as well as formally setting the date for the Autumn Budget, which will take place on 30th October this year.

The former Chancellor, Jeremy Hunt, suggested the deficit announcement was a “shameless attempt to lay the ground for tax rises” at the Autumn Budget.

In addition to that possibility, the Treasury document published following Reeves’ speech revealed that the government will “increase HMRC’s compliance staff, invest in HMRC’s resources and technology infrastructure, and make legislative changes to tackle tax non-compliance and raise revenue”.

Importance of Single Enforcement Body to Labour’s plans

Promised in 2019, the Single Enforcement Body has become a priority for the new government, which has acknowledged that tax non-compliance in the umbrella sector is one of many issues the body could resolve.

Under the current enforcement system – which the party says is “unsually fragmented and inefficient” – workers and businesses are disadvantaged and exposed to compliance risks.

The Single Enforcement Body aims to offer “greater coordination” and protection for workers, while also combatting promoters and enablers of tax non-compliance in the umbrella sector.

In addition, the government plans to consult on the introduction of a single ‘worker’ status which  “differentiates between workers and the genuinely self-employed” – a move which could have repercussions for contractors affected by the off-payroll reforms.

These plans were outlined in the party’s ‘New Deal for Working People’ document, which remains the only official source of policy plans until the government puts forward more detailed draft legislation.

However, despite ongoing efforts to stamp out tax non-compliance, the naming of four more schemes in the last month highlights the extent of the issue in the umbrella sector, and the need for greater deterrents and enforcement.