HM Revenue & Customs (HMRC) has made full use of its newly introduced powers to name tax avoidance schemes by warned users of two promoters that they may face “large tax bills”.
The schemes in question are:
- Absolute Outsourcing, of Foerster Chambers, Todd Street, Bury, Greater Manchester; and
- Equity Participation Scheme, promoted by Purple Pay Limited, of Gracechurch Street, London.
On 7 April 2022, HMRC advised anyone involved in Absolute Outsourcing’s or Purple Pay Limited’s Equity Participation Scheme to “withdraw from them as soon as possible to prevent building up” a significant tax liability.
The naming and shaming of tax avoidance schemes and their promoters has never been done by the UK tax authority, and it falls under its recent campaign to warn the public not to get “caught up in tax avoidance”.
Mary Aiston, HMRC’s director of counter avoidance, said: “These schemes are cynically marketed as clever ways to pay less tax. The truth is they rarely work in the way the promoters claim and it’s the users that end up with big tax bills.
“New legal powers allow us to name promoters and the schemes they peddle much faster, and this announcement is just the first step.
“But we need the public to be vigilant, and that’s why we’re also helping people identify, and steer clear, of these schemes through our Tax Avoidance – Don’t Get Caught Out campaign.”
Details and warnings
HMRC said that both Absolute Outsourcing and Purple Pay’s schemes involve individuals agreeing an employment contract and working as contractors.
The schemes then pay them national minimum wage, while the remainder of their salary is paid through a loan to avoid National Insurance and income tax.
The taxman added: “By releasing the details of these schemes, HMRC is letting taxpayers know as early as possible so they can steer clear of them or exit them.
“HMRC will also regularly update the list by publishing the details of other tax avoidance schemes and their promoters. 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.”