Her Majesty’s Revenue and Customs (HMRC) has brought fresh impetus to its crackdown on tax avoidance schemes, issuing a £1 million fine for one promoter and ‘naming and shaming’ four additional schemes.

Hyrax Resourcing Ltd received a £1 million fine for promoting a tax avoidance scheme that paid contractors through loans rather than taxable income.

The scheme paid contractors the National Minimum Wage, with earning topped up with loans that were transferred to an offshore trust. These loans weren’t declared as income so scheme users didn’t pay tax on all of their earnings.

Mary Aiston, HMRC’s director of counter-avoidance, said: “This £1 million fine should serve as a stark warning to tax avoidance promoters. Those who ignore their legal duty will face serious consequences. We actively tackle promoters of tax avoidance schemes and are determined to drive them out of business. We continue to use the full force of the law to challenge tax avoidance scheme promoters.”

Hyrax Resourcing Ltd was fined the maximum fine of £600 for each day that the scheme was not disclosed. At a total of 1,791 days, this resulted in a fine of £1,074,600.

HMRC also added another four companies to its list of ‘named tax avoidance schemes, promoters, enablers and suppliers’.

Countrywide Partners Limited, Industrial PAYE Limited, Pure Invoicing Limited and U R Group Limited were all named by HMRC as having been involved in tax avoidance schemes.

Industria, Pure Invoicing and U R are now in the process of insolvency.

HMRC recently gained the power to ‘name and shame’ companies involved in tax avoidance schemes. It has now published 11 tax avoidance schemes and their promoters. But this is not a complete list of all the tax avoidance schemes currently being marketed in the UK.

HMRC recommends exercising extreme caution when choosing a contractor payment scheme.

In recent weeks, HMRC has showed a renewed determination to tackle contractor payment schemes that don’t comply with UK law.

Individuals that are caught using tax avoidance schemes are liable to pay large fines, as well as any tax that HMRC thinks is unpaid.

Miles Grady, Director of Umbrella.co.uk, said: “HMRC’s renewed focus on tax avoidance schemes is bad news for promoters and the contractors that use them. As always, our advice on how to avoid these schemes is that if something sounds too good to be true, it probably is.”

For more information about contractor pay and tax avoidance schemes, speak to a member of our team today. Call: 01625 546 610.