Contractors ‘need to be Usain Bolt’ to keep 20 ‘payroll pirates’ at bay

A war of words over how to describe tax avoiders posing as umbrella companies has been replaced by a clash over who should be listing the entities to warn contractors.

Currently, HMRC updates its list of avoidance schemes, enablers and suppliers sporadically.

In December 2024, HMRC ‘named and shamed’ just two new tax avoidance schemes -- First Paye Consultants Ltd and Acquda Solutions Ltd.

In January 2025, HMRC blacklisted seven schemes and in February (to date), it has newly blacklisted five.

‘Stop Notices’

An additional five tax avoidance schemes last month came under “Stop Notices,” effective on either the promoters or their arrangements.

The seven schemes HMRC warned against in January were; Calculate Ltd, Masterstroke Solutions Ltd, Medbridge Ltd, Penhale Solutions Ltd, Pinnacle & Partners Ltd, Rainwize Umbrella Ltd, and Stark Payment Ltd.

The five schemes similarly blacklisted by HMRC in February 2025 (to date) are; Remuneration Assured Ltd, Trident Umbrella Ltd, Umbrella Link Ltd, Vortex Ltd and Imace Ltd (on Feb 20th).

The five avoidance schemes with arrangements or promoters coming under HMRC stop notices in Feb (so far) are MLG Pay Ltd; Ultra Employment Ltd, Universe Payroll Ltd, Whitebridge Management and Vision Human Resource Solutions Ltd.

‘Contractors need to be Usain Bolt to keep pace with schemes’

ContractorUK forum moderator "cojak" is alive to the sheer number of schemes HMRC is urging contractors to “withdraw from” in 2025.

The forum moderator (who is a former IT contractor) reflected: “[While] it was quiet [before] Christmas…HMRC is [so far this year] getting back into its stride.

“Although [nowadays, contractors] need to be [100-metre world record holder] Usain Bolt to keep up”.

It is not the speed or sporadic nature of HMRC’s updates that is triggering questions as to who is best-placed to administer a list detailing avoidance schemes.

‘FCSA could likely produce more timely, relevant list’

“Many of the entities [often blacklisted are inactive] businesses long before the list is published,” observes WTT Group’s Graham Webber.

“It seems to me that bodies like the FCSA would be more likely to have real-time information on the market and that a list produced from that information would be more timely. And be more relevant.”

The Freelancer & Contractor Services Association agrees, insofar as it says it sees avoiders masquerading as umbrellas “every day.”

The association says it reports such activity “at every opportunity” and echoed that it knows “the best way to tackle it.”

‘FCSA should lead on identifying and reporting bad actors’

Online, Webber pressed his point to the accreditation body that “work identifying and reporting the bad actors in the contracting field,” should be “led by the FCSA.”

Webber says “others” in the industry could help, but he believes all bad actor identifying and reporting should be done by FCSA, effectively ‘not requiring government [intervention] at all.’

FCSA’s Chris Bryce acknowledges that “there is a strong argument for” his organisation to lead on the issue of listing avoiders posing as umbrellas.

‘Payroll pirates’

Ultimately, though, the association isn’t convinced.

“The payroll pirates are a thorn in all our sides,” the FCSA’s chief executive told Mr Webber, seemingly referring to HMRC.

“So if we can work together with government to stamp them out, or reduce their impact on professional payroll intermediaries, and workers, and the tax take, there’s an argument for that too.”

‘Differ'

Despite seeming to agree with Bryce on aspects, Webber acknowledged the clear disagreement between the two of them, stating: “We'll have to differ on that one.”

WTT’s co-founder isn’t the only tax dispute expert who thinks HMRC’s list of avoidance schemes has probably had its day.

Tom Wallace, also of WTT Group where he heads up tax investigations, yesterday told ContractorUK:

“While the aims of the HMRC list are to be applauded, it is clear that it is not discouraging people entering the market to operate schemes that HMRC have already warned against. 

“At what point does tax avoidance -- the art of exploiting shortcomings in legislation, become evasion -- the criminal act usually prosecuted as ‘cheating the public revenue?’”

‘Naughty list contains nothing new’

Wallace signalled it’s not as if HMRC (or the FCSA, or ‘others’) needs to be able to need to hit a moving target.

“With New Year 2025 came a new batch of disguised remuneration schemes being added to HMRC’s ‘naughty list’ of tax avoidance schemes. 

“But the description of how each scheme operates shows us that there is nothing new here.

“It’s only the same schemes, under different names, operated by new players to the market,” he said. 

‘Avoidance schemes masquerading as umbrella companies’

Like Wallace, Carolyn Walsh previously worked as a tax inspector for the government.

“These companies masquerade as umbrella companies and to almost anyone other than HMRC, that’s what they look like,” Walsh told ContractorUK.

“And understandably so. In fact, as long as all umbrella companies use the same two-prong payment method, the key difference contractors have to spot between the rogue and the reputable is that the latter correctly taxes both elements.”

It is not just contractors potentially on the hook or with concerns, however.

‘Autumn Budget 2024 announcement may stop recruitment agencies being tempted’

“We all want a level playing field, both in the umbrella sector and in the recruitment sector too,” begins RocketPaye’s John Bounds.

“While these schemes [on HMRC’s blacklist] still exist we can't have it. Hopefully, the announcement in Autumn Budget 2024 making the recruitment company responsible for the tax and NICs [of umbrella companies] will stop agencies from being tempted to use these tax avoidance models.

“But the worrying thing for agencies is that HMRC loves to apply things retrospectively.”

‘Agencies who think taxman isn’t looking’

RocketPaye’s sales director, Bounds explained: “So agencies who think they have a year to get their house in order [before umbrella regulation of April 6th 2026] risk being caught out.

“If agencies think the taxman isn’t looking at [umbrellas they use now], they really need to review their PSL -- as a priority.”

An HMRC social media update last week indicates it is recruiters in the healthcare, media, transport, engineering and IT sectors who may want to be on watch.

‘Naming and shaming’ Umbrella Link Ltd, the Revenue felt the need to point out that the scheme targets workers in those five sectors, as well as social care.

‘Isle of Man scheme’

The other noticeable online update from HMRC about the 20 new schemes and companies since December 2024 to have joined its avoidance blacklist (including an updated entry for Rainbowpay Ltd), concerns Ultra Employment Ltd.

The Revenue said Ultra’s users get paid a salary through PAYE and an amount paid via the growth of a share “held in the Isle of Man,” and it added the warning: “Don’t get caught out.”

‘Beware take-home booster offers’

The tax department issued the same message in an online post urging taxpayers to “spot the signs of tax avoidance.”

“Been offered a way to boost take-home pay?” HMRC asked LinkedIn users. “Don’t get caught out.”