Tax scheme warning for fleets and drivers
【Summary】HMRC warns fleets and drivers in the haulage sector about non-compliant umbrella companies selling tax avoidance schemes. These schemes involve receiving payments that are claimed to be non-taxable, resulting in higher take-home pay. However, HMRC states that most of these schemes do not work and are successfully challenged in court. Those who join such schemes may end up paying more in taxes, interest, and penalties.
HM Revenue & Customs (HMRC) is warning temporary workers and contractors in the haulage sector about non-compliant umbrella companies that sell tax avoidance schemes. Tax avoidance involves trying to pay less tax by bending the rules of the tax system, according to HMRC. Some umbrella companies offer tax avoidance schemes where workers receive their pay as a loan, salary advance, grant, annuity, or other non-repayable payment. These payments are presented as non-taxable, often without explanation, with the promise of higher take-home pay. However, HMRC states that most of these schemes do not work and are successfully challenged in court. Those who join these schemes end up having to pay the tax due, along with interest and potentially penalties, in addition to the fees they have already paid to join the scheme.
HMRC is urging commercial fleet operators to inform their temporary workforce about the risks and warning signs of tax avoidance schemes. This not only protects the drivers but also helps fleet operators avoid tax compliance checks, penalties, tax liabilities, and reputational damage caused by using workers involved in tax avoidance schemes.
To spot when an umbrella company is operating an avoidance scheme, workers should avoid companies that pay part of their salary in the form of loans or other non-taxed payments, claim to significantly reduce their tax liability, make unrealistic promises about take-home pay, or falsely claim that their scheme is approved by HMRC. Workers should also be cautious if more money is deposited into their bank account than is shown on their payslip.
If a worker suspects they have used a tax avoidance scheme, HMRC encourages them to contact them. HMRC aims to help workers get back on the right track and offers support. If workers cannot afford to pay everything at once, HMRC may be able to arrange an instalment plan for tax and interest payments. Workers can email HMRC at [email protected] for further information and assistance in getting out of an avoidance scheme.
HMRC regularly updates its educational campaign for contractors working through umbrella companies to help them spot warning signs of tax avoidance and know what steps to take if caught up in a scheme. The campaign includes a risk checker to identify if any contracts may involve tax avoidance.
Since April 2022, HMRC has publicly named tax avoidance schemes and their promoters to help taxpayers avoid or exit avoidance. However, this is not a complete list of all schemes or promoters. HMRC will continue to provide further details on schemes and take action to disrupt promoters of tax avoidance.
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