HMRC urges contractors to do their homework, as seven avoidance schemes are blacklisted

The taxman isn’t taking a new approach of only blacklisting avoidance schemes which he’s already formally asked their personnel to stop selling or promoting to contractors.

His Majesty’s Revenue & Customs made the denial after ContractorUK observed to officials that two consecutive updates of the list only contained companies already under stop notices.

On Oct 12th, HMRC blacklisted Focus Contractor Ltd - subject to a stop - and on Nov 12th it blacklisted Buckingham Wealth, Hive Umbrella and PAYE Services; all under stops as well.

'Withdraw'

But in line with the suggestion of coincidence, rather than a new policy, HMRC blacklisted Bluestar Associates and Excala Solutions on November 17th, and neither are subject to stops.

Two more companies contractors must “withdraw from” made the blacklist on Dec 1st, and they too do not have stops in their name; Griffith Anderson Ltd and Rainbowpay Ltd.

Reflecting online on the update (the last to date), which revised an existing entry for Bluemoore Associates Ltd, was an assistant director at HMRC, Gill Standen.

'Do your homework'

 “The moral of this story for contractors is simply this -- do your homework, before you sign up”, she advised.

“This means reading any contracts carefully, and if you don’t understand anything, seek independent advice.

“[It also means] not being afraid to ask as many questions…as you wish [and it further means] checking and researching any third-party companies who are operating payroll for your job assignments”.

'Enjoy your job assignment with no worries'

Standen added that for “peace of mind”, and to “enjoy your job assignment with no worries,” contractors could contact HMRC to check before using a provider that it’s not a scheme.

Ed Paul, employment tax manager at Colt Technology Services confirmed: “HMRC does have a dedicated email address for those who wish to contact HMRC [with queries].”

Whether it’s contacting the Revenue to get a provider checked out, or running due diligence checks, payroll audit firm Payepass says relying on the blacklist won’t cut it to stay safe.

'Schemes coming out of the woodwork'

Following the seven schemes being blacklisted by HMRC between October and December, Payepass CEO Julia Kermode told ContractorUK: “HMRC's list [of named tax avoidance schemes] keeps on growing, in a never-ending cycle. 

“And it will never end, because named schemes are removed after 12 months. That means the more promoters added, the more there are coming out of the woodwork still to be added.

“So while it is a good starting point, my advice is don't rely solely on HMRC's list as it will never be comprehensive.”

'We're determined to throttle the supply'

But the naming and shaming of 61 schemes has helped “protect thousands of individuals” while undermining those companies’ offerings, according to the tax authority.

An HMRC spokesperson told ContractorUK: “Promoters themselves said these publications would cause them significant damage and make it unlikely they could continue trading.

“We have significantly cut losses to tax avoidance schemes for individuals by more than two-thirds over the last decade. A hardcore of avoidance promoters remain, but we are determined to throttle the supply and stop them selling their schemes.”

The ‘throttling’ is in the shape of publishing schemes’ details, and it is broadly achieved by HMRC using three powers; DOTAS, Finance Act 2022, and POTAS Stop Notices.

'Twenty-two HMRC stop notices since August 2022'

But the Revenue has also been buoyed by both the appeal period and litigation against its issuing of stop notices expiring for a number of schemes, allowing it to upload more details.

The HMRC spokesperson added: “We have issued 22 stop notices since August 2022, legally requiring a promoter [in 22 cases] to stop promoting a tax avoidance scheme.

“The government remains committed to introducing tougher consequences for promoters of tax avoidance and… Autumn Statement announced a new criminal offence will be created for those who continue to promote avoidance schemes after receiving a stop notice.”

In the Nov 12th avoidance list update, and presumably to help contractors recognise the type of marketing which promoters use, HMRC published the ‘Nova Declaration,’ a “newsletter” which it says Buckingham Wealth was using to encourage contractors to sign up to its arrangements.