Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended.

It often involves contrived, artificial transactions that serve little or no purpose other than to produce this advantage. It involves operating within the letter, but not the spirit of the law.

Most tax avoidance schemes simply do not work, and those who use them may end up having to pay much more than the tax they tried to avoid, including penalties.

There are a few warning signs to look out for that could mean you are in a tax avoidance scheme or could be about to join one:

 

• It sounds to good to be true! If it sounds it, it most certainly is! If companies offer to lower your tax bill for little or no cost. Companies that promise that you will have to pay little more than the sign up fees – this is a big red flag.
• Pay in the form of loans or untaxed payments – Some schemes designed for contractors, agency workers and other temporary workers or small and medium-sized employers, involve giving workers some or all of their payment either as a loan or other payment that they’re not expected to pay back.

 

Other ways in which these untaxed payments may be described is as:

• Grants
• Salary advances
• Capital payments
• Credit facilities
• Shares and bonuses
• Fiducary receipts

 

• Any scheme that promises to put money in a workers pocket without having to pay tax on it. These schemes are often sold by non-compliant umbrella companies.

• Huge Benefits – Any scheme that seems out of proportion from money being generated.
• Misleading Claims – these include claims suggesting endorsement or backing of the HMRC (‘HMRC Approved’ ‘Retain more earnings after tax’ ‘We ensure you get the highest amount of take home pay’ etc) The HMRC does not approve tax avoidance schemes
• Non compliant umbrella companies – Many umbrella companies operate within the tax rules, however, some umbrella companies promote tax avoidance schemes. These schemes claim to be a ‘legitimate’ or a ‘tax efficient’ way of keeping more of your income by reducing tax liability.

 

Before signing up to any scheme or provider, you should do your research and find out as much information as you can about the provider

Choose a provider who is a member of a professional body that regulates its standards and behaviours

If you think you might be in a tax avoidance scheme, the HMRC has dedicated teams to help you pay what you owe to settle your tax affairs. The earlier you contact HMRC, the less interest you’ll pay.

Here at Agency Payroll Our aim is to ensure we give the best possible customer care, ensuring all of our contractors are paid accurately and on time. In addition, we also provide a best-in-class benefits package, available to all workers.

We are Passport Professional Approved Provider and members of the REC

To find out more about Agency Payroll can support you, contact our team on 033 033 36572 or email us on info@agencypayroll.co.uk