HMRC highlights employment-based avoidance schemes for contractors and agency workers
An updated version of a tax avoidance report from Her Majesty’s Revenue & Customs (HMRC) accuses promoters of such schemes of targeting NHS workers who went back to work in the Covid-19 crisis, as the market has “decisively shifted” to focus on middle-income workers and employment-related remuneration instead of on high-income individuals and investment offerings.
The updated report, ‘Use of marketed tax avoidance schemes in the UK’, was released last week. Among the findings: Bookkeeping is the profession making up the highest percentage of tax avoiders at 20%, with medical professionals/nurses close behind at 18%. Temporary employment represents only 9%.
“It is no longer just about higher-income individuals using investment-based avoidance schemes involving Hollywood films or gold bullion,” said Mary Alston, HMRC’s director of counter-avoidance. “Instead, the market has decisively shifted towards employment-based avoidance schemes, aimed at those with middle income levels, including contractors and agency workers.”
Alston went on to say: “Over the last year we have seen them target NHS workers who returned to the frontline to battle Covid-19. Promoters have also targeted those to whom they had already sold schemes that left them with big Loan Charge tax bills, with further schemes that they wrongly claimed get around the charge.”
Geographically speaking, Barking and Dagenham are now the national leader for workers using tax avoidance schemes, the report said.
HMRC data shows further that individuals involved in tax avoidance during 2018-19, use of the schemes was most prevalent in the 41-60 years age group. “On average, they are involved in tax avoidance for about three years. Almost half have been involved in more than one avoidance scheme,” the report said.
To help taxpayers stay out of avoidance, HMRC has launched a new early intervention project. The aim, the report said, is to support taxpayers to get out of avoidance schemes as early as possible and settle their tax bill “before they build up a large unpaid liability”.
“Increasingly, we are using sophisticated data analysis to identify people who may have got involved in tax avoidance schemes so we can warn them of the consequences as quickly as possible,” said Alston.
This spring, the government will consult on measures to tackle promoters which are aimed to ensure that promoters face “significant” financial consequences for promoting tax avoidance more quickly than before.
The full report can be accessed here at the gov.uk website.
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