COVID-19: SPOTLIGHT 54 – Tax avoidance promoters target returning NHS workers
01 April 2020
- HMRC publish Spotlight 54 addressing the surge in tax avoidance promoters targeting those returning to work in the NHS to fight the COVID-19 pandemic.
- HMRC are particularly concerned with the use of umbrella companies to lure individuals into a tax avoidance scheme that prevents HMRC from receiving the correct amount of income tax and national insurance contributions (NIC).
- Government believe that umbrella companies offer two payments to the individual:
- The first payment is classed as employment earnings and will go through the umbrella company payroll. This is often at the rate of National Minimum Wage or a flat rate payment.
- The second payment will not be taxable. Government suggest that this payment may be described as: a loan, annuity, shares, a capital advance involving mutual, joint or co-ownership, or a payment derived from a revolving line of credit facility, or some other non-taxable form.
- HMRC urge those returning to work for the NHS to be careful not to sign up to these schemes.
To read the full spotlight, click here.
Aspire Comment
The use of an umbrella company to facilitate tax avoidance would explain why HMRC seem to be targeting their resources towards temporary labour supply chain fraud, including contracting intermediaries (commonly known as umbrella companies). Unfortunately, the actions of some will tarnish those who run their businesses compliantly, paying the correct amounts of income tax and NIC.
Promoters of tax avoidance are seeing the COVID-19 outbreak as an opportunity to make a profit. NHS staff who are already overworked and may find little time to review extensive documentation are the perfect targets for exploitation.
It is imperative that, where possible, you review that the correct amount of tax and NIC is being deducted from your wages, as well as the breakdown of payments being received that should be visible on your itemised payslips.
If you feel that you may be using a tax avoidance scheme, you must contact HMRC at the earliest opportunity.