HMRC blacklists Purity, Paystone, Flex, React, Abchurch, Procorre and Contractor Bureau over avoidance

HMRC used the first quarter of 2024 to add seven arrangements it says contractors should withdraw from to its avoidance ‘blacklist.’

In reverse order, Purity Ltd was ‘named and shamed’ on Jan 25, even though director Rebecca Waterfield dissolved the firm back in 2019.

On Feb 1, Paystone Services Ltd was similarly identified by HMRC as a scheme to “withdraw from…to prevent building up a large tax bill.”

Named by HMRC on the same day alongside Paystone, which targeted individuals who work in technology, was Flex Payroll & Accounting Ltd.

'Secondary payment'

Paystone and Flex are alike, in that employees received a “secondary payment” with no income tax and NICs deducted, HMRC says.

On Feb 29, HMRC blacklisted React Administration Services Ltd, Abchurch Ltd and, warned against since 2019, Procorre Ltd.

The seventh avoidance scheme promoter identified by HMRC so far in 2024 is Contractor Bureau Ltd; blacklisted on Thursday.

'Drop in quality'

Reflecting after Procorre but before Contractor Bureau got listed, one adviser accused the HMRC resource of showing “a drop in quality”.

The adviser said that to explain why a scheme doesn’t work (which contractors can find useful), HMRC was now simply referring to prior editions of Spotlight.

Details given by the taxman were “generic,” even “templated,” the adviser further criticised, citing Abchurch’s and React’s entries.

'Propelled payment'

But under ‘How the scheme is claimed to work,’ six lines of detail and seven lines of detail, respectively, are provided, an HMRC spokesperson observed yesterday to ContractorUK.

HMRC’s written entry for React even specifies what users might have heard the secondary payment called by the firm -- a “propelled payment.”

The Revenue’s Spotlight series is linked to by HMRC in the React and Abchurch entries, as the adviser says, albeit under the heading “Any other information HMRC considers relevant to publish about these schemes.”

But HMRC referencing Spotlight in this “Any other information…” section is not new -- it appears in over 20 other entries on the list, appearing almost as a ‘further reading’ suggestion.

'HMRC is not blind to what's being offered to contractors'

Fairer criticism of the Revenue’s avoidance blacklist is that it only features schemes  -- which it says taxpayers should withdraw from -- for a period of 12 months.

It is a perceived shortcoming not lost on Lousie Rayner, founder of NumberMill.

“HMRC must remove these names after 12 months on the list.

“[But] at least [the HMRC resource] demonstrates that they are not blind to what is being offered to agencies and contractors,” Rayner says.

And what’s being offered to both contractors and UK organisations which contractors supply is alarming, according to a Caroola/Parasol client manager.

'Significant risks from mini-umbrella companies'

“I'm once again alarmed to discover another agency potentially engaging with mini-umbrella companies, exposing both contractors and clients to significant risks,” wrote the manager, ‘John S.,’ in the period where HMRC listed the seven.

“These schemes create an uneven playing field, impacting legitimate umbrella companies and agencies alike, and presenting substantial reputational and financial risks throughout the supply chain.”

Referring to long-promised regulation of umbrella companies (now scheduled for April 18th 2024), the Caroola/Parasol manager said he hopes the legislation would soon “close the door on MUCs and other contrived models.”

'Those caught in the arrangements don't believe it's a loan scheme'

WTT Consulting is warning that the models aren’t just contrived -- they’re also increasingly tricky to spot as a user.

“The way the scheme has been marketed means that, in my experience, those caught up in the arrangements do not believe it is a loan scheme”, said WTT’s Tom Wallace, about Procorre.

Taking to LinkedIn last week after Procorre was blacklisted by HMRC, Wallace continued:

“The scheme, and the likely tax position, is much more complicated if you went through the further company acquisition steps to pay-off your capital account.

“We are currently speaking to HMRC about the likely additional tax consequences of those transactions.”


Compounding the situation for Procorre users, WTT’s Graham Webber said a “Procorre Legal” was seemingly helping answer HMRC enquiries, but it has now reportedly ceased communicating.

Webber explained: “Whilst I have my doubts as to the helpfulness of some of the responses we have seen, to withdraw support just when the HMRC enquiries are reaching a critical point, seems ominous.”

Similarly not boding well, is an ‘umbrella company’ claiming to be able to pay contactors in a manner that doesn’t attract tax -- where that manner is supported by a "leading UK tax counsel."

'Bill down the pub has just as valid an opinion'

Webber warned of his discovery: “The Supreme Court said in 2017 that a payment made to an individual qua employee is employment income and is taxable. Not some of it -- all of it.

“[And] QC/KC opinions mean nothing. It's just an opinion. Bill down the pub has just as valid an opinion.”

WTT’s tax director added that further “warning signs” are umbrella companies showing “no incorporation data” on Companies House.

Likewise, “no membership logos” on an umbrella company’s website, which would imply no accreditation, was said to be a potential red flag.

“Please check that they're genuine,” Webber urged contractors of accreditation bodies, sounding aware it may be the body itself which is underhand, spurious or fictional.

“Promises [from an umbrella company] that HMRC has never investigated [should also ring alarm bells].”

'Riskier contractor engagement strategies'

SAW Consulting, which assesses brollies to help them achieve HMRC compliance, says the 2 pence NICs cut at Spring Budget 2024 may have lessened the need for ‘solutions.’

“Hopefully with more money in their pocket, contractors may be less tempted by some of the less than compliant umbrellas, and schemes,” says SAW Consulting’s boss Shelley Ankers-Wainwright. 

But that hope may already be in vain as online on Monday, NumberMill said the cost-of-living crisis was still biting, meaning: “Individuals and organisations are feeling pressure to engage with riskier contractor engagement strategies than usual.”

Profile picture for user Simon Moore

Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
Printer Friendly, PDF & Email

Contractor's Question

If you have a question about contracting please feel free to ask us!

Ask a question

Sign up to our newsletter

Receive weekly contractor news, advice and updates.

Every sign up will be entered into a draw to WIN £100 Amazon Vouchers.

* indicates required