HMRC have released an important guidance to educate contractors on the nature of tax avoidance schemes being run by umbrella companies.

Umbrella companies that encourage taxpayers to use tax avoidance schemes often move workers between different umbrella companies to hide the tax avoidance from HMRC.

HMRC does not approve or endorse umbrella companies or tax avoidance schemes. Non-compliant umbrella companies often claim that these tax avoidance schemes allow agency workers and contractors to keep more of their earnings. However, this is not true.

Tax avoidance schemes that make these claims do not deduct and pay the correct amount of tax and National Insurance contributions for you. As a result, you could end up owing HMRC money or not receive the benefits you are entitled to.

Click below to access the full HMRC guidance on spotting tax avoidance schemes and identifying red flags on contracts and payslips.

https://www.gov.uk/guidance/warning-for-agency-workers-and-contractors-who-are-moved-between-umbrella-companies-spotlight-71