HMRC avoidance ‘list of shame’ updates, with Alphasaint, Worx 4U, Solucionis, Acacia Management Services and Ultra Employment

Varying levels of sophistication characterise five new schemes which HMRC added to its avoidance blacklist in April 2024.

The five are; Solucionis Ltd, Acacia Management Services Ltd, Alphasaint Ltd, Ultra Employment Ltd, and Worx 4U Ltd.

The variance in the sophistication of the five schemes is a bit like the variance in the aims advisers say the HMRC list is achieving.

'List of shame'

NumberMill founder Louise Rayner says HMRC’s “list of shame” is ‘enabling transparency, as to who are engaged in these schemes.’

Brookson’s Matt Fryer says like stop notices, the list ‘educates taxpayers to avoid schemes and stops promoters marketing them.’  

Oblako’s Carolyn Walsh prefers that the list is a warning to “beware umbrella companies providing unlawfully high take-home pay.”

'No effort at disguising disguised remuneration'

Out of the three advisers, it is Walsh who observed one scheme in particular appears brazen, while one seems to cover up with layers.

“The new Disguised Remuneration (DR) entries vary from the sophisticated like Worx 4U, to the explicit like Alphasaint,” Walsh began in a statement to ContractorUK.

“With Worx, workers signed a ‘self-employed advance deed,’ so that tax and NI free advances could be made against future earnings.

“Contrast that, with the seemingly no effort at disguising the disguised remuneration made by Alphasaint.

“With its ASL [scheme], worker income was split, with the second much larger payment simply not treated as employment income.

“The HMRC’s notes on ASL don’t say so , but I suspect this was as ASL just felt like running the payroll in a blatantly non-compliant way.”

'Thriving'

Arrangements coming with both frills and no frills ties in with Professional Passport on Tuesday describing the DR market as “thriving.”

The compliance organisation was reflecting on an HMRC consultation (closing today), on enquiry/assessment powers and safeguards.

But HMRC already has a couple of relatively new anti-avoidance powers -- to ‘name and shame,’ and to impose stop notices on promoters as well as arrangements.

'Stop notice should be issued at same time as entry on HMRC avoidance list'

“Introduced in 2022, the HMRC list today has just short of 80 named tax avoidance schemes, promoters, enablers and suppliers,” Brookson’s Mr Fryer told ContractorUK.

“Second, HMRC can issue a stop notice to a tax avoidance scheme promoter instructing them to stop selling or promoting the scheme.

“In an ideal world, the stop notice should be issued at the same time as HMRC publish details of the scheme. However, HMRC have to follow certain procedures under the legislation, hence things feeling a little disjointed.”

On top of the five newly ‘named and shamed’ on the HMRC list, three old entries got updated last month with ‘stops.’

The three are; Prime Umbrella Services Ltd (named back in August 2023), and the promoters of Contractor Care Ltd and PAYEme Ltd.

“HMRC started publicising stops last March and today they total 23, with details on a separate yet linked part of HMRC’s site,” says Fryer.

'Rules are rules'

Uniting both non-stop and stop entries on the list, is that “in every case,” it is contractors who must repay the underpaid tax and NI.

“That’s because rules are rules,” Walsh, a former tax inspector, added of her assessment.

“They - the workers - are expected by HMRC to have known the employer - the brolly, wasn’t correctly deducting under PAYE.

“That said, I agree with IT contractor recruitment firm VIQU which last week argued that agencies should know better too.”

'Taxman has the might and manpower'

Walsh warned that her old employer has “an almost bottomless pit of tax avoidance scheme providers to tackle.”

“And HMRC has the financial might and manpower to challenge every one of them,” she continued.

“But as it’s the workers who suffer the consequences, they must heed the warning that ‘If it’s too good to be true, then it always is.’”

'HMRC struggles'

Crawford Temple, CEO of Professional Passport isn't so sure about the taxman’s ‘might and manpower.’

“HMRC struggles to combat [disguised remuneration schemes and other mass-marketed tax avoidance ploys],” he says.

“[The tax department’s] current misguided tactic of pursuing individuals caught up in these orchestrated arrangements is appallingly misdirected.

“It is the scheme architects and promoters who are the real criminals -- in need of far more rigorous policing.”

'What action - if any - against the promoter?'

Tax investigations specialist Richard Morley agrees that the targeting is off.

Following the March 14th 2024 addition to the HMRC blacklist of Contractor Bureau, Morley reflected:

“Clients that used Contractor Bureau may find themselves owing unpaid tax liabilities to HMRC.

“[But] what action - if any - will be taken against Contractor Bureau itself?”

'Legitimate and genuine'

A partner at Independent Tax, Morley says there’s another question though, and it can be asked by any former user of the 80-plus entries on the HMRC list.

“The one question I’m always asked by clients who are left to sort out the mess, and make good unpaid liabilities including possible penalties, after they are enticed to sign up to these schemes…[is] ‘How is this allowed to happen?’”

The investigations specialist typically hears another remark from burnt scheme users, and that is ‘But it all seemed legitimate and genuine.’ 
 
“Yes, except it wasn't,” Morley posted, almost correcting any former scheme user who has such a thought.

“There are many tax professionals like me who are involved with helping contractor clients who… [are] having to deal with an ever more sceptical HMRC.

“[They] want to know why the [contractor] didn't do more to 'test' the advice they received, [and] why they didn't 'seek advice from anyone else.

“Rather bizarrely, [HMRC also wants to know] what assurances they received from their adviser that the arrangements they were signing up to was 'not a tax avoidance scheme.'”

'Rejoicing at receiving 90% take-home'

To help safeguard contractors, Walsh, the ex-tax official, suggested a phrase of her own.

“‘Don’t Be a Lemming.’ It’s as good as ‘If it’s too good be true, then…’ Contractors ought to say this to themselves if they hear their colleagues rejoicing at receiving 90% take-home pay. Just know if you follow it; you won’t end up a lemming, but they absolutely will end up throwing themselves over the cliff into financial disaster.”