HMRC has, for the first time, named the promoters of tax avoidance schemes aimed at contractors, warning users that they could face significant tax bills if they do not leave the schemes soon. The two schemes have been named as Greater Manchester-based Absolute Outsourcing and the Equality Participation Scheme, promoted by London-based Purple Pay Limited.
Both schemes operated by getting workers to sign employment contracts and work as contractors. These workers were then paid the National Minimum Wage, with the rest of their wage paid via a loan, in an effort to avoid income tax and National Insurance Contributions (NICs).
The two schemes have become the first to be named by HMRC after it was granted the power to name promoters of tax avoidance schemes as part of wider efforts to clamp down on and discourage tax avoidance.
HMRC has advised any contractors involved in the schemes promoted by Absolute Outsourcing and Purple Pay Limited to withdraw as soon as possible, warning that failure to do so could result in a large tax bill being accrued.
HMRC Director of Counter Avoidance Mary Aiston commented: “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.”
“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.”
Going forward, HMRC has said it will continue to update its list of named tax avoidance schemes and those promoting them and added: “If a tax avoidance scheme is not shown in the list, this does not mean that the scheme works or is in any way approved by HMRC.”
