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HMR&C Aware of New Avoidance Schemes

‘Spotlights’ is used by HMR&C to help tax payers from unwittingly entering into arrangements that HMR&C are likely to see as tax avoidance.

The Spotlight announced on 23rd August 2011 states that HMR&C are aware of new tax avoidance schemes, which have been set up to avoid tax and NI contributions, are being advertised to contractors. The claim is that the schemes get around new disguised remuneration rules.

HMR&C list the different types of arrangements that could fall under this Spotlight and leave contractors facing severe financial penalties:

  • 1. Passing payments through a series of companies
  • 2. Loans from a third party or an offshore alleged employer
  • 3. A Deed of Covenant
  • 4. Secondment from one employer company to another
  • 5. Claims of self-employment

In HMRC’s opinion these arrangements do not succeed in avoiding the tax and NICs due. HMRC will challenge these arrangements and litigate where necessary to recover unpaid tax and NICs.

HMR&C maintain that current legislation ensures that rewards and recognition from working for UK-based businesses are charged appropriately to UK Income Tax and NICs. This legislation applies whether the rewards are routed through employee benefit trusts, employer funded retirement benefit schemes or through any other intermediaries, either as loans, transfers of assets or other payments. The legislation will also apply to such third party arrangements where an employment is disguised as self employment or a contractual arrangement.

HMR&C also warn that there could be adverse Inheritance Tax and Trust Tax consequences from using avoidance schemes that rely on trust arrangements.

ContractorUmbrella operates a PAYE employment solution, so you don't have to worry about any of the above if you register with us! Read what some of our previous employees have to say about us.

If you would like to discuss registering, you can contact a member of our team on 01206 713 680 or email us at info@contractorumbrella.com.

‘Spotlights’ is used by HMR&C to help tax payers from unwittingly entering into arrangements that HMR&C are likely to see as tax avoidance.

The Spotlight announced on 23rd August 2011 states that HMR&C are aware of new tax avoidance schemes, which have been set up to avoid tax and NI contributions, are being advertised to contractors. The claim is that the schemes get around new disguised remuneration rules.

HMR&C list the different types of arrangements that could fall under this Spotlight and leave contractors facing severe financial penalties:

  • 1. Passing payments through a series of companies
  • 2. Loans from a third party or an offshore alleged employer
  • 3. A Deed of Covenant
  • 4. Secondment from one employer company to another
  • 5. Claims of self-employment

In HMRC’s opinion these arrangements do not succeed in avoiding the tax and NICs due. HMRC will challenge these arrangements and litigate where necessary to recover unpaid tax and NICs.

HMR&C maintain that current legislation ensures that rewards and recognition from working for UK-based businesses are charged appropriately to UK Income Tax and NICs. This legislation applies whether the rewards are routed through employee benefit trusts, employer funded retirement benefit schemes or through any other intermediaries, either as loans, transfers of assets or other payments. The legislation will also apply to such third party arrangements where an employment is disguised as self employment or a contractual arrangement.

HMR&C also warn that there could be adverse Inheritance Tax and Trust Tax consequences from using avoidance schemes that rely on trust arrangements.

ContractorUmbrella operates a PAYE employment solution, so you don't have to worry about any of the above if you register with us! Read what some of our previous employees have to say about us.

If you would like to discuss registering, you can contact a member of our team on 01206 713 680 or email us at info@contractorumbrella.com.

Why Choose ContractorUmbrella?

ContractorUmbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

Benefits of working through ContractorUmbrella;

  • Fast and easy registration-  be ready to work in 24 hours, simply register online and we’ll take care of the rest.
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  • Same day payments- we offer same day payments as standard, for no additional fee.
  • Our Commitment Charter- is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company accountancy- when you sign up to our sister company Dolan Accountancy, you can transfer to ContractorUmbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits- at ContractorUmbrella there are many benefits available to you as our employee including Childcare Vouchers, our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Personal Employee Liaison Officer- we believe in the personal touch, so you will have your very own dedicated Employee Liaison Officer during your employment with us. Read some of the glowing testimonials we've received about our lovely staff and the outstanding commitment they give to all our employees and clients.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.