HMRC identifies four more tax avoidance schemes 

Additions of Acacia Management Ltd., Alphasaint Ltd., Ultra Employment Ltd. and Worx4U Ltd. raise questions over government’s commitment to regulation

HMRC has added four more tax avoidance schemes to its current list of named tax avoidance schemes, promoters, enablers and suppliers – bringing the total number of identified schemes to 74.

Acacia Management Services (registered at Byrom Street, Manchester), Alphasaint (registered at Shelton Street, London), Ultra Employment (Temple Street, Liverpool) and Worx 4U (Regent Place, Birmingham) were added to the list last week (11th April).

All four of these schemes used different forms of disguised remuneration to pay their umbrella workers. Typically, this sees workers paid in convoluted ways – such as through loans – to avoid paying the taxes due on the income.

While HMRC is making headway in publicly identifying and raising awareness of tax avoidance schemes, questions remain over the government’s approach to tackling these schemes at source.


Spectre of Loan Charge still looms large

These latest additions to HMRC’s list also follow the news, as reported by the Financial Times, that 40,000 people are still being pursued over the Loan Charge.

Introduced in 2019, the Loan Charge seeks to recover unpaid taxes from workers who were previously involved in disguised remuneration schemes – before HMRC designated these as a tax avoidance mechanism.

The policy remains contentious and highly controversial, having been linked to ten suicides. In the context of non-compliance in the umbrella sector, the Loan Charge offers a reminder of the harm that tax avoidance schemes can cause.

The continued failure to regulate the umbrella industry has seen thousands of workers fall victim to avoidance schemes. The government has pledged to introduce a Single Enforcement Body (SEB) to oversee compliance, but with a general election due by January 2025, it is unclear if that pledge will be fulfilled.

Until such time, umbrella workers – including contractors who have been left with no choice but to work via umbrellas since IR35 reform – remain exposed to tax non-compliance risks.


“Too little, too late”

Speaking about the identification of four more tax avoidance schemes, Julia Kermode – founder of IWORK and former CEO of the FCSA – welcomed HMRC’s action but labelled it “too little, too late”.

“A better focus would be to prevent these schemes existing in the first place, which is why we need government-led regulation of umbrella companies and payment intermediaries”, Kermode said.

“Given the volume of money going through such businesses, it is shocking that the sector isn’t already regulated”. 

“In the meantime, unsuspecting contractors continue to be aggressively targeted by tax schemes, and lured into arrangements which will cost them dearly later”, she added.

Kermode also slammed the government for its inaction, saying that it “is well aware of the problems” and despite offering promises to regulate the sector, “has so far failed to do anything”.

“This is totally unacceptable and insulting to contractors who continue to be the backbone of the UK’s economy”, she said, concluding: “Let’s hope this year’s general election will bring about a shift in priorities”.  

If you think you might be involved in tax avoidance, you can check HMRC’s list of known tax avoidance promoters, use HMRC’s online risk-checking tool or report tax avoidance online.

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