HMRC is aware of new tax avoidance schemes for contractors

High earning contractors, including those working as accountants, may be interested to read the latest advice from HMRC.

The Revenue has taken the opportunity to warn contractors that it is aware of new tax avoidance schemes that are being advertised to people working through recruitment agencies, highly paid employees and contractors. The schemes in question are designed to avoid National Insurance contributions and Income Tax.
The advertisers of the schemes say they have been designed to bypass the new rules on disguised remuneration.

HMRC said that these arrangements come in various guises and could involve third party loans, deeds of covenant, claiming to be self-employed or payments going through a series of companies. In the Revenue’s opinion these will not succeed in avoiding NIC and tax liabilities and it intends to challenge the arrangements and if necessary go to litigation to recover any NICs and tax that are unpaid.

Meanwhile, the Institute of Credit Management has criticised the government’s plans to simplify financial reporting for micro-businesses in the UK.

The government recently outlined its proposals to let smaller businesses file a single trading statement with HMRC and Companies House.

Chief executive of the ICM, Philip King, said the government’s latest publication confused the issue. It says businesses are burdened down with bureaucracy but that they could do more to help the economy if additional financial information was available to them.

He also queried whether the government understands the role credit plays in business, saying information was critical to help companies make informed decisions and that need doesn’t disappear even if a company is small.

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