HMRC have named two tax avoidance scheme promoters under new powers granted to them by Finance Act 2022.
As part of HMRC’s measures to clamp down on tax avoidance and particularly those promoting it, Finance Act 2022 provides that HMRC may publish information about Promoters, or anyone suspected of being a promoter of a tax avoidance scheme if they consider it appropriate for the purposes of:
- Informing taxpayers about risks associated with, or concerns they have about, the proposal or arrangements.
- Protecting the public revenue.
The first list of promoters has now been published and includes just two companies:
- Absolute Outsourcing Limited in respect of scheme reference number 45474323. The scheme would appear to be a type of contractor loan scheme and is described as follows:
“The users complete an advance deed along with their employment contract. This advance deed is intended to justify the user receiving non-taxable advance payments along with a National Minimum Wage salary. The aggregate payments amount to around 82% of their gross contract earnings.”
- Equity Participation Scheme (EPS)/Purple Pay Limited (PPL) in respect of scheme reference number 03817064. This scheme also appears to be a contractor loan scheme, described by HMRC as:
“PPL invoice and receive payment from the end-user. PPL pay the user around 5% of this amount as wages which is taxed under Pay As You Earn (PAYE). PPL pay around 75% of this amount as an advance to the user under the employee cash flow facility. This amount is not taxed under PAYE. PPL retain around 20% of the amount as their fee.”
Had this list been put together ten years ago or more it would have reached double or treble figures, however many promoters have since ceased to trade. Even so, it seems unlikely that these are the only two remaining tax avoidance promoters out there, and presumably, the list will grow over time. Taxpayers considering or being encouraged to enter into new tax avoidance arrangements should check the list, as well as taking advice, before agreeing to join such schemes.
Finance Act 2022 has also introduced, from 24 February 2022, new powers for HMRC to charge penalties to UK resident entities found to be facilitating tax avoidance schemes involving non-resident promoters.
- The penalties can be up to 100% of the total fees received by all promoters involved in promoting the avoidance scheme.
Useful guides on this topic
Promoters of Tax Avoidance Schemes (POTAS)
Who is a Promoter? What are the Promoters of Tax Avoidance Scheme rules? What does this mean for promoters, intermediaries and clients?
DOTAS: Disclosure of Tax Avoidance Schemes
What are the Disclosure of tax avoidance schemes (DOTAS) rules? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?
Disguised remuneration loan charge
What is disguised remuneration? What is the loan charge? When does the loan charge apply? Will the loan charge affect me?
HMRC press release: HMRC names avoidance scheme promoters for the first time