Four men and one woman have been arrested on suspicion of fraud in connection with promoting arrangements designed to avoid paying the loan charge. The five individuals arrested will be interviewed under caution by HMRC officers, and a sixth woman will attend a voluntary interview, also under caution. Officers are looking into several alleged offences, including conspiracy to cheat the public revenue, conspiracy to evade income tax and national insurance contributions, fraud by abuse of position and conspiracy to transfer, disguise and convert criminal property. Over 100 HMRC officers seized computers, other digital devices and both business and personal records from business premises in the West Midlands, Northumberland, Buckinghamshire and Northern Ireland. Speaking on behalf of HMRC’s Fraud Investigation Service, a spokesman said:
“Those that enable, promote or facilitate tax fraud are firmly in our sights and we currently have more than 200 such suspected enablers under criminal investigation.
We are keen to protect the public from those who devise and market fraudulent schemes which at best do not work and at worse mean that people could end up being involved in fraud.
People need to think extremely carefully before they enter into any scheme that claims to significantly lower your tax bill. If something looks too good to be true, then it almost certainly is. HMRC’s advice is firmly to steer clear.”
These interventions are the latest in a series where HMRC is targeting fraud offences associated with disguised remuneration tax avoidance schemes.
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Returning NHS workers targeted by tax avoidance promoters (Spotlight 54) 1 April 2020
Individuals who are returning to the National Health Service (NHS) to help to respond to the outbreak of COVID-19 have been targeted by immoral promoters of tax avoidance schemes. HMRC is advising affected individuals to be wary of signing up to these schemes. The schemes on offer all have common features, but they may be described in different ways. One consistent element will be that the scheme attempts to disguise the true level of earnings, which should be subject to Income Tax and National Insurance (NI) contributions.
The scheme will usually use an umbrella company, and the wages offered will consist of two separate payments:
• A first payment declared as earnings which is processed through the umbrella company payroll, ordinarily in line with National Living Wage (NLW) / National Minimum Wage (NMW) levels. This could also be a flat rate payment, for example, £100 a week • A second payment, which the umbrella company states is not taxable. This could 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 Some of the companies may provide ambiguous explanations as to how the schemes work, so the advice is to be alert to any companies that claim to use personal allowances more effectively, resulting in take home figures of anything between 80% and 85% of gross pay.
The payslips provided by the umbrella company may also look incorrect and might detail the first payment only and / or inaccurate deductions from pay.
When individuals are asked to sign documents other than their contract of employment, they should consider this very carefully, and should question any requests to sign separate agreements to receive loans, advances, shares, annuities or anything else not relevant to their work. This could result in tax avoidance, and individuals could owe tax and interest, as well as having to pay the relevant fees to the umbrella company.
If individuals believe that they are being offered this type of scheme, they should:
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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