As part of their increased efforts to protect contractors from tax avoidance schemes, HMRC have published official guidance to help contractors identify tax avoidance schemes that are being promoted and facilitated by non-compliant umbrella companies.

Published on HMRC’s website, the official guide (which can be accessed by clicking the link below) outlines the key aspects of tax avoidance schemes and should be used by contractors to help them understand the main hallmarks of tax avoidance schemes that are targeted at contractors.

https://www.gov.uk/guidance/umbrella-companies-offering-to-increase-your-take-home-pay-spotlight-45#how-these-arrangements-work

Not only does the guide describe how these arrangements work, it provides useful information on why contractors should question umbrella companies who offer unrealistic take home percentages. The guide also explains the financial risks faced by contractors who choose to be paid by an umbrella company who facilitate payments through tax avoidance.

One of the most important points contained in the guide is a reminder to contractors that they are ultimately responsible for their tax affairs and paying the correct amount of tax. As a result, anyone who uses a tax avoidance scheme that is challenged by HMRC will find themselves responsible for the unpaid tax. Due to HMRC’s ever increasing resources at identifying tax avoidance schemes, the risk of receiving a bill for unpaid taxes has never been greater.

Mortimer Childe, and all other compliant umbrella companies, welcome the publication of the guide as it will help to prevent contractors making risky, uninformed decisions about their payment arrangements that will result in the contractor receiving demands from HMRC for unpaid tax and additional financial penalties.

If you have any questions about HMRC’s official guide or you (or someone you know) feels they might be using the sort of scheme described in the guide, please feel free to get in touch with a member of the team at Mortimer Childe who will be happy to answer any questions you have.

 

Mortimer Childe

Tel – 01905 651035

email – info@mortimerchilde.co.uk