HMRC has issued Spotlight 37: Disguised remuneration: job board avoidance scheme. This features a scheme which attempts to avoid income tax and NICs by paying contractors in the form of redeemable loyalty points.

Under the scheme:

  • The contractor is an employee of an umbrella company.
  • They are paid in two parts:
    • A small basic wage.
    • Loyalty points for advertising their services on a job board.
  • The loyalty points can be cashed in with no tax or NIC deductions.

In the Spotlight HMRC state that:

  • In their view such schemes don’t work: receiving and redeeming loyalty points is taxable as employment income.
  • Employment agencies and businesses involved in the scheme may also be liable for failing to correctly deduct tax and NICs.
  • They will challenge all users of the scheme and umbrella companies applying it, and will also consider applying the GAAR.

An email address is provided for taxpayers who wish to get out of such schemes and who don’t already have a contact at HMRC.

Links

Our guides:

Anti-avoidance: HMRC's spotlights 

Disguised remuneration

HMRC's spotlight can be found here.


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