Taxman not ruling out chasing third parties of Industria PAYE; Pure Invoicing or UR Group

HMRC isn’t ruling out going after third parties in the contractual chain of three insolvent firms newly featured on its avoidance scheme, promoter, enabler and supplier list.

When the list was updated last month, advisers wondered if agencies and other intermediaries to the insolvent trio; Industria PAYE Limited, Pure Invoicing, and UR Group, were at risk.

'Associated businesses'

That’s because under the Criminal Finance Act, ‘associated businesses’ of avoiders can face severe penalties for facilitating tax avoidance, regardless of knowing of the avoidance.

Experts have previously told ContractorUK that in effect, the act lets HMRC seek unpaid tax elsewhere in the supply chain, if its officials are unable to collect tax from primary parties.

But even when asked, the Revenue will not say if associated businesses of the now defunct avoiders, Industria PAYE, Pure Invoicing or UR Group, are due to have an inspector call.

'Seek to collect the tax due within the law'

“We cannot comment on specific cases,” an HMRC spokesperson said, when asked if third parties up the supply chain of the three avoiders unable to pay their debts will be approached.

The HMRC spokesperson would only say: “In general terms, HMRC will always seek to collect the tax due within the law.”

To Orca Pay Group, that’s code for ‘expect collection if you are an intermediary to one of the three firms,’ which joined the list alongside Countrywide Partners (solvent) in mid-August.

'Exceptionally worried'

“I would be exceptionally worried for any businesses that have been in the supply chains of these tax avoidance promotors,” says Orca’s CEO Robert Sharp.

“The three being in the process of insolvency…gives HMRC a prime opportunity to actually go up the supply chains and recover any liabilities they believe may be due from the third parties [of those three].”

Paul Lloyd, a director at Brookson said: “Recruitment agencies need to be aware of who they are paying in their supply chain.

“If you haven’t checked HMRC’s list against who you make payments to, you should do ASAP. The Criminal Finance Act could leave ‘promoters’ of these schemes open to liabilities and fines.”

'Dim'

Online, contractors are stumped as to why HMRC is ‘naming and shaming’ businesses to avoid, when the businesses are no longer operating because they are insolvent.

“This may seem dim but should not HMRC be prosecuting and closing down these firms rather than listing them?” asked a software engineer.

“Imagine the police doing the same. ‘That one there has a gun and is a killer, so try not to get killed, but if you do get killed we might think about prosecuting him if we have time.’

'Even if the firm is in liquidation'

Asked by ContractorUK if it’s not a "bit late" to be spotlighting avoiders, when those avoiders are no longer active, the HMRC spokesperson said: “We name promoters when we are able to under the legislation, even if the firm is in liquidation.”

On Aug 31st, HMRC added two more firms to its list of avoiders for contractors to avoid – The Umbrella Agency Ltd, and Omni Contractors PCC Limited (or just ‘OCP,’ but also known as Saxonside Ltd – Saxonside Share Growth, or just ‘SAX’).

“Contractors, please be careful when choosing an 'umbrella', there are lots more schemes out there than [the 17 now] on HMRC’s list,” warns Julia Kermode, founder of IWORK.

“Just because something isn't listed here, doesn't mean it's ok. [Also though], for the first time, HMRC has named the directors of the two additions to the list; [Stuart John Brooke of The Umbrella Agency, plus Adam Fathers of SAX, and Kirsty Le Marechal of OCP].”

'Now using new powers to name directors'

HMRC said in a statement to ContractorUK: “HMRC has used new powers for the first time to publicly name the directors of two tax avoidance promoting companies.

“Whilst HMRC now regularly shares the details of tax avoidance promoters and the schemes they sell, naming the directors behind these schemes will alert the public to steer clear of any avoidance schemes promoted by other companies with the same directors.”