HMRC's ‘naming and shaming’ of Absolute Outsourcing Ltd and Purple Pay Ltd, expires

The taxman has taken down two schemes from his avoidance ‘blacklist’ -- but for reasons contractors probably won’t welcome.

Formerly of the tax office, WTT Group’s Tom Wallace was first to spot the two removals, made last week without any of the fanfare HMRC reserves for when it adds new schemes.

'Simple reason'

Reflecting on Absolute Outsourcing Ltd and Purple Pay Ltd no longer featuring on the official avoidance scheme, promoter, enabler and supplier list, Wallace said:

“You wouldn't be criticised for thinking that HMRC have investigated the scheme[s], decided they do not seek to gain a tax advantage…and therefore removed [them].

“Unfortunately you would be wrong.

“[They] have been removed for the simple reason that the legislation which allowed publication of the scheme details only allowed them to be published for 12 months.”

'Legally obliged'

Yesterday, Professional Passport confirmed to ContractorUK that under Finance Act 2021, HMRC is "legally obliged" to remove firms on the ‘named and shamed’ list after a single year.

That 12-month window being too little-known is why IWORK chief executive Julia Kermode has supported the list as an HMRC resource -- until now.

“Although it is not fully comprehensive, I always supported [the list] as a step in the right direction to help people who might otherwise be unwittingly caught up in dubious schemes.

“I am now u-turning my view,” says Kermode, “because it means that known tax avoidance scheme promoters are only ever [going to be] listed [to the public] for one year.

“After which point, they [will be] removed and free to continue trading in the same guise.”

'Pop up in another guise'

Continuance – or not – is a key point for compliance specialist Crawford Temple, Professional Passport’s chief executive officer.

“What is important is that those [removed] companies do not pop up in another guise in due course,” Mr Temple told ContractorUK.

“HMRC needs to keep a track of the directors behind such schemes to ensure that they do not set up in business ever again.

“HMRC has all the data it needs to identify the perpetrators of dodgy schemes and it must tap into that information quicker.”

'Removal may be marketed as evidence of HMRC acceptance'

Yet it is information quickly disappearing from HMRC’s website which is troubling PayePass.

“[As] the government has only been naming and shaming these schemes for one year…[in] a few weeks and months…the list will continue to shrink,” said the software and audit firm’s Fred Dures.

But the concern at WTT Group is how the HMRC list potentially shrinking may be hijacked.

Its tax investigations director Mr Wallace asked: “I wonder how long it will take for a promoter to point to the removal of a scheme that operated the same way as theirs as ‘evidence’ of HMRC acceptance?”

'Stamping'

This worrying prospect follows the Director of Labour Market Enforcement, Margaret Beels, drawing up a 2023/24 enforcement strategy that she says “builds” on themes used previously.

But compliance specialist Mr Temple has come up with his own themes, all of which relate to HMRC not announcing or outlining that it is abiding by legislation by de-listing companies it has previously identified as providing avoidance arrangements.

“For me visible enforcement, transparency, and communication. These are vital to stamping out non-compliance,” Professional Passport’s boss says.

“HMRC’s naming-and-shaming list must not serve as lip service. But [it should] serve to ensure that those listed do not do business again -- and must be prevented from duping innocent workers into signing up for their schemes.”

'Not listed, doesn't mean the scheme works'

Absolute Outsourcing Limited, of Booth Street, Greater Manchester, is now in liquidation but was added to HMRC’s blacklist in April 2022 when it was first compiled and unveiled.

Purple Pay Limited (previously Cetrolink Ltd), of Gracechurch Street, London, was also an inaugural entry on the list at the same time, in relation to its Equity Participation Scheme (EPS).

On .gov, HMRC says: “If a tax avoidance scheme is not shown in the list, this does not mean that the scheme works or is in any way approved by HMRC. HMRC does not approve tax avoidance schemes for use.”

'Frustrating'

Emma Naylor, a director at Parasol told ContractorUK: "HMRC’s decision to remove the details of tax avoidance schemes from their published list after 12 months is frustrating on a number of levels.

"It leaves the market being more difficult to navigate, and ultimately it is still the contractors who pay the price if they get their decision wrong. It highlights the urgent need for tougher regulation of the umbrella sector once again -- something we have long advocated for."