HMRC blacklists Paybox Umbrella, T2 Outsourcing and Novus Consultants

Paybox Umbrella Ltd, T2 Outsourcing Ltd, and Novus Consultants Ltd – previously trading as Contractor Corner Accounting Ltd, have joined HMRC’s list of tax avoidance schemes.

The addition of the three firms, registered in Blackburn, Liverpool and the Isle of Man/Blackpool respectively, takes the number of schemes blacklisted by HMRC to seven.

‘To prevent a large tax bill building up’

In fact, if you are involved with any of the seven, all of whom promote or enable/supply avoidance you should withdraw “to prevent building up a large tax bill,” urges HMRC. 

Much as they were upon Peak PAYE Ltd joining the HMRC list in June, advisers are pleased that the exposure of schemes with the potential to ruin contractors’ livelihoods is increasing.

“There are now seven on HMRC’s list,” says IWORK’s Julia Kermode. “I know that’s a tiny proportion given the number of schemes out there, but it’s good to see the list being updated.”

‘Good start’

An umbrella company compliance consultant Shelley Ankers-Wainwright, who is the boss at SAW Consulting says the seven-strong list represents “a good start”.

But for HMRC to operate merely a ‘list’ for arrangements to be avoided because they could leave their users with life-changing liabilities, seems totally off to a senior software engineer.

“Why are [companies] added to a list. If they are doing something wrong, then close them down.”

The software engineer continued: “Leaving them running just puts others at risk. I actually did not know there was a list. That’s how useful a list is.”

‘A quick, easy, friendly solution’

Actively proving inclusion doesn’t mean closure, one of the list’s June entries is (at the time of writing) still touting for business online, saying “contact us” for “rapid invoicing and processing every time.”

One of the three new entries (for July) on the HMRC blacklist, Paybox Umbrella Ltd, uses similarly ‘sales-y’ language to entice contractors to commit to its offering.

Registered in Blackburn, operating out of Leeds, and facilitated by its Maltese-registered umbrella company PUL Malta, Paybox Umbrella says its “solution” for contractors to get paid via an agency is “quick, easy and friendly.”

‘Tax-free advance’

But HMRC seemingly disagrees, saying users receive two payments from PUL Malta, one which is paid at the NMW rate and a second payment -- an “advance” -- which is not paid through the payroll and which is not subject to tax and NICs.

An interim HSE consultant, so the very type of contractor that Paybox, T2 and Novus would invariably like to turn into a paying customer, is almost annoyed.

Specialising in the oil and gas sector, the contractor vented: “The most frustrating thing with all this is that most limited company contractors hired professional, chartered, accountants to keep them right and to ensure they paid the correct taxes each year.

“[But] now, perversely, IR35 has forced many [contractors] into these [sham] ‘PAYE-Umbrella’ arrangements, so they have lost control of their tax affairs and unwittingly become ‘tax dodgers’ without even knowing it.”

‘One legal opinion doesn’t mean the scheme works’

In an online thread used by one person to express contentment at Paybox getting ‘named and shamed’ by HMRC, another simply advised: “If it sounds too good to be true, it probably is.”

Meanwhile, Adam Connell, boss at Bright Sky Umbrella indicates that the advice given to contractors needs to delve a bit deeper -- to be truly effective as a deterrent.

“Always do your own research [when presented with a take-home pay offering]. If a promoter says their scheme is ‘legal’ or that they have legal opinion, it does not mean it works.”

‘Beware a higher tax bill’

Mr Connell explained “A lawyer may have given an opinion on a scheme, but often it’s heavily dependent on a list of circumstances that may not be relevant to you.

“You cannot rely on an opinion given to somebody else. It’s also only one opinion and may not be correct.”

In a final alert to contractors, the umbrella boss warned: “If you sign up to a scheme that does not work, you may end up with a higher tax bill than expected”.