HMRC – the tax authority that cannot advise when an arrangement constitutes tax avoidance

• Spotlight 45 updated after only 3 weeks

• HMRC cannot advise on which schemes to avoid

Spotlight 45

HMRC has recently published an update to Spotlight 45 to clarify that they cannot comment on the legitimacy of any particular umbrella scheme. Instead, workers are advised to seek independent professional advice where “you are not sure whether you are involved in this type of tax arrangement”.  This comes just 3 weeks after publication of the Spotlight and so, implies that they have received a lot of queries about this.

With many individuals left unsure as to whether they are ramping up tax liabilities, it is disappointing to see HMRC, as the body that should be best placed to help, refuse to assist.

Spotlight 45 was published in August 2018 and sets out cryptic instruction on avoiding working via an umbrella tax avoidance scheme.  Potentially it is the rather vague nature of the notice, which fails to mention any scheme by name or any company, which has led to so many enquiries.

Aspire Comment

It is clear from HMRC’s need to disassociate themselves from assisting the individuals with determining the legitimacy of an arrangement, that they are not willing to help taxpayers identify tax avoidance but will be there to enforce the penalties if the individuals make the wrong decision.

Despite being the UK’s authority on taxation, there is a concerning lack direction for the public on identifying tax avoidance schemes which can be presented in such a complex and plausible way as to be very difficult to spot.

Through investigations, Government publications and case law, HMRC have demonstrated a worrying misconception of umbrella companies, agencies and the intermediary sector, further emphasising a long-held belief that HMRC is willing to tarnish the industry as a whole rather than seeking out and dealing with the perpetrators of these avoidance schemes on an individual basis.