HMRC warns IT consultants and others of 12 ‘payroll entities’

HMRC’s list of “dodgy tax avoidance schemes” appearing to show its age in November didn’t stop the taxman from adding 12 new names.

Updating it on the 7th, 21st and 28th, HMRC showed the list to now feature Intu Solutions Ltd, which HMRC says targets “IT consultants.”

Risking making it sound like insurance, HMRC said that ISL also “cover” healthcare workers and North Sea engineers.

‘Inflating take-home pay’

Former tax officer Carolyn Walsh says Intu uses the term “propelled payment” to euphemise the non-compliant part of its contractor pay.

“Whatever the label, it’s a second payment which HMRC says isn’t subject to PAYE deduction and should be,” Walsh told ContractorUK.

“[Schemes typically] issue payment one at National Minimum Wage, so it looks compliant but payment two isn’t, inflating take-home pay.”

‘Century Umbrella’

HMRC blacklisted Jigsaw Pay (also known as Jigsaw Payment Solutions Ltd), as well as Protean Ltd, on November 21st too.

The eight others blacklisted by HMRC are; Astra/TGI Payday, Adapt, Clear Water Administration, Greenlight Payroll Services, Balance Bay, Consortious Solutions, Employe Ltd, and “Century Umbrella.”

But to call any entry on “Current list of named tax avoidance schemes…” an ‘umbrella company’ is unfair, says Orca Pay Group.

‘Stop generalising’

“The first thing…[HMRC] need to do is stop generalising [all] payroll entities as ‘umbrella companies,’” says Orca’s CEO Rob Sharp.

“Those organisations that are deliberately promoting evasion models are not an umbrella company. And are far, far from ever being one.

“This narrative is dangerous… [as it has created the misleading impression] that everyone [on HMRC’s list] is an umbrella company.”

‘HMRC should instead call them payroll entities, not umbrellas’

Sharp says he prefers the term “payroll entities”.

He wants HMRC to start getting into the habit of using “payroll entities” to describe the blacklisted companies.

Already seeming to speak Sharp’s kind of language is Josh Boult of Recruitment Solutions Services Ltd.

“Almost daily we are receiving phone calls from ‘payroll companies’ advising they can save us £200-500k per annum,” posted Boult.

“I can understand why companies might take them up on this offer, but the bottom line of this is -- it’s illegal.”

‘Blurring the lines between avoidance and evasion’

But there is no unlawful activity by any firm that HMRC is ‘naming and shaming’ according to an IT delivery and assurance contractor.

The contractor, Mark Lander, told HMRC on its LinkedIn page: “Stop blurring the lines between avoidance and evasion.

“Tax avoidance AKA tax planning is legal. These posts [by you] give the impression that avoidance is illegal. It is not.”

‘Could seem like an endorsement by HMRC’

Lander isn’t alone in finding fault with how the Revenue takes to LinkedIn, and X (formerly Twitter), when it updates its blacklist.

“Can I make a suggestion?” a tax director, Kieran O’Conner, asked online of the Revenue.

“[You as HMRC] saying ‘We’ve named Intu Solutions Ltd as a promoter of tax avoidance’ could seem to the layman as if you are endorsing or recommending them.”

‘It’s always workers who foot the bill’

Ironically, a payroll provider making claims of ‘HMRC approval’ is one of the red flags that HMRC warns contractors to look out for.

The boss at Oblako Ltd, ex-tax official Ms Walsh reiterated last night: “When an entity states it’s ‘HMRC-approved,’ workers have to stop.

“Because it’s always the workers who have to repay the unpaid PAYE on their income.”

‘HMRC’s avoidance blacklist doesn’t address the root cause’

Seb Maley of Qdos says while HMRC identifying schemes “does help” protect flexible workers, “and the wider supply chain,” a bigger safeguard is incoming.

He says: “I’d argue that [the HMRC blacklist] doesn’t solve the root cause of the issue.

“This government has made it clear it wants to stamp out tax avoidance once and for all. Regulating the umbrella industry would be…[a better place] to start”.

‘Stop recruitment agencies from being tempted’

John Bounds of Rocket Paye also suggests that the April 6th 2026 framework is going to do more for the sector than an online list.  

He says: “Hopefully the announcement in the budget [of HMRC] making the recruitment company responsible for the tax and NI…will stop agencies from being tempted to use these tax avoidance models.”

But Walsh disagrees that Labour’s October 30th 2024 promise to regulate umbrella companies makes the HMRC list from 2022 seem old hat, as she says both have a role to play.

‘Umbrella company regulation isn’t the way to protect workers’

The former tax inspector told ContractorUK: “While it’s welcome, regulating umbrella companies isn’t the way to protect workers.

“We need to help workers understand that receiving their wages as part basic pay at National Minimum Wage, and part ‘commission’ ‘advance’ or ‘propelled payment’ -- whatever that is, is a problem.

“If workers can’t see how each element is taxed, they can’t be sure deductions are correct. So hammering home the point that higher than expected take-home is too good to be true, is the only effective way of alerting workers to this issue.”