Since April 2022, HMRC have been able to “name and shame” serious tax evaders on their website. This list which names tax avoidance schemes is published on a quarterly basis.
HMRC may publish information about tax avoidance schemes, promoters, enablers, and suppliers where it has:
allocated a Scheme Reference Number (SRN) to the tax avoidance scheme under the Disclosure of Tax Avoidance Scheme (DOTAS) rules.
given a stop notice to the promoter telling them to stop promoting the tax avoidance scheme, or where the promoter is the recipient of a monitoring notice, under the Promoters of Tax Avoidance Schemes (POTAS) rules, or
issued a penalty to an enabler under the Enablers of Tax Avoidance (Enablers) rules.
a suspicion that a scheme involves tax avoidance under the publishing legislation in the Finance Act 2022 (the ‘2022 legislation’)
In the last week, it has come to light that those who are on this list, are removed after one single year. Two known UK tax avoidance schemes have been removed from the government’s official list after being placed on it in April 2022, due to a “loophole” stated in the Finance Act 2021, which prevents avoider’s details being published for more than 12 months.
Absolute Outsourcing Ltd and Purple Pay Ltd are no longer named on the avoidance scheme list. The schemes paid contractors the National Minimum Wage with the remainder of their wage paid through a loan to try to avoid National Insurance and Income Tax.
Unsurprisingly, this has caused uproar and confusion as HMRC have not announced the removal of details of the tax avoidance schemes, in the same way they announce published lists.
Julia Kermode, founder of IWORK, a body championing independent workers has said “Naming a tax avoidance scheme only to delete it from an official list a year later is crazy. How can anyone steer clear of tax avoidance schemes when HMRC’s own list isn’t up to date?”
Even though both schemes have been removed from HMRC’s list, this does not mean HMRC condemn the use of them - Contractor UK have stated “On .gov, HMRC says: “If a tax avoidance scheme is not shown in the list, this does not mean that the scheme works or is in any way approved by HMRC. HMRC does not approve tax avoidance schemes for use.””
Contractors and employees should remain vigilant of companies who are promoting schemes which involve income tax and national insurance avoided, if not, they will soon face a hefty tax bill from HMRC and the company in question will face being named and shamed by HMRC.
The fact that schemes can be removed after just one year, despite their ongoing risks, definitely raises concerns. It seems counterproductive to remove names without clear communication, especially when so much effort goes into warning contractors and the public about tax avoidance. Julia Kermode makes a great point—if the list isn’t up-to-date, how can anyone confidently avoid these schemes? The takeaway here is to stay alert and not rely solely on HMRC’s list for guidance. Thanks for shedding light on this! https://templatecalendar.com/