Tax bill warning as HMRC exposes avoidance schemes

Tax bill warning as HMRC exposes avoidance schemes

Anyone involved with questionable tax avoidance schemes have been warned by H M Revenue & Customs (HMRC) to withdraw from them as soon as possible.

HMRC issued the warning after naming Absolute Outsourcing’s or Purple Pay Limited’s Equity Participation Scheme and said people should withdraw to avoid building up a hefty tax bill.

This is the first time HMRC has used new powers to name tax avoidance schemes and their promoters as part of a campaign to warn the public not to get caught up in tax avoidance.

How do the schemes work?

Commenting on the move, Mary Aiston, HMRC’s Director of Counter Avoidance, said: “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.

“New legal powers allow us to name promoters and the schemes they peddle much faster, and this announcement is just the first step.”

The two schemes named are:

·         Absolute Outsourcing, of Foerster Chambers, Todd Street, Bury, Greater Manchester.

·         Equity Participation Scheme (EPS), promoted by Purple Pay Limited (PPL), of Gracechurch Street, London.

HMRC said that both Absolute Outsourcing and Purple Pay’s schemes involve individuals agreeing an employment contract and working as contractors.

The schemes then pay them national minimum wage, while the remainder of their salary is paid through a loan to avoid National Insurance and income tax.

How do I avoid being caught out?

By releasing the details of these schemes, HMRC is letting taxpayers know as early as possible so they can steer clear of them or exit them. 

Ms Aiston added: “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.”

HMRC will also regularly update the list by publishing the details of other tax avoidance schemes and their promoters.

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.

For help and advice on taxation matters, please get in touch with our team today.