Knowledge is Power

Nowhere to hide – HMRC gets personal by naming Directors

It has been several months since HMRC began naming and shaming tax avoidance schemes to help prevent contractors from getting tied up with dodgy umbrella companies. But HMRC have just increased their powers and are now able to get more personal, by naming directors of schemes or directors of companies who promote of tax avoidance schemes.

With the list growing, the net is tightening around non-compliant umbrella firms who fail to look after contractors.

HMRC issues a “Stark warning to promoters”

Back in April, HMRC began naming and shaming tax avoidance schemes and their promoters to help contractors to not get caught up in tax avoidance.

Dodgy umbrella companies often operate tax avoidance schemes which are cleverly marketed to make contractors think that they can pay less tax if they sign up with them.

How do tax avoidance schemes work?

Non-compliant umbrella companies often use a well-known tactic in an attempt to prevent the payment of tax and national insurance contributions. Disguised remuneration schemes involve paying the contractor the minimum or living wage and paying the remainder disguised as a loan or bonus payment. These schemes don’t work, and the contractor is left with a huge tax bill.

And because this is common practice in non-compliant companies, by the time the bill comes the company has often folded leaving the contractor with no support.

HMRC preventing future schemes

Tax avoidance promoters are often serial offenders, who go on to create new companies when the first one has been found out. To prevent this from happening, and to further deter tax avoidance schemes, HMRC is now able to name and shame not only the name of the company, but also publicly identify the names of guilty company directors.

The new powers have been granted to HMRC under Section 86 of the Finance Act 2022 and it is hoped that naming and shaming directors, shareholders, and company officers of companies promoting tax avoidance will help prevent contractors from being caught up with tax avoidance. The changes also help speed up the process of sharing the details of the schemes.

“Naming the people behind tax avoidance schemes is a crucial step in helping customers stay clear of current and future schemes they promote,” said Mary Aiston, Director of Counter Avoidance at HMRC.

On 31st August HMRC added the first names to their list.

A growing list

A total of fifteen companies have now been identified as promoting tax avoidance schemes, and two directors have been named personally.

Being added to the list follows being issued with a stop notice from HMRC. HMRC are keen to point out that this is not a complete list of all tax avoidance schemes or their promoters, this is only the tip of the iceberg.

Here is the latest list.

As a compliant umbrella, Ship Shape welcomes this new move which will help protect contractors and deter dodgy umbrellas from operating in our industry. Ship Shape offers both compliant umbrella services, as well as a PEO solution, both of which can help you save time and money, but most importantly remain compliant. For more information, don’t hesitate to get in touch.
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