27 August 2024
HM Revenue and Customs (HMRC) has added two new names to the current list of named tax avoidance schemes, promoters, enablers and suppliers.
The most recent update was on 22 August 2024 with the addition of Fast Payroll UK Ltd (FPUK) and Your Pay Ltd (YPL).
HMRC has provided additional information regarding its interpretation of the schemes and how they work:
“The arrangements involve users providing their services to end clients as employees of FPUK. The users sign an employment contract with FPUK that will pay them a basic salary, of at least the rate of National Minimum Wage or National Living Wage, which is subject to deductions for Income Tax and National Insurance Contributions (NIC). Scheme users also receive an additional amount (combined with the basic salary as a single payment) referred to as a ‘withdrawal amount’, which is paid to them without the deduction of Income Tax and National Insurance.”
“The arrangements involve users providing their services to end clients through YPL. The users sign a contract of employment that will pay them a basic salary at a rate close to the National Minimum Wage or National Living Wage. YPL then makes a single payment to the user comprising two elements. The first element is the salary, with Income tax and National Insurance Contributions (NICs) deducted, and the second element is an additional amount (described as a withdrawal) without Income Tax or NICs deducted.”
“HMRC’s view is that both elements of the payment should be treated as ‘normal income/as the user’s salary’, and therefore subject to Income Tax and NICs. In most cases, the user’s salary is paid at the minimum rate permitted under the National Minimum Wage Act 1998. HMRC have previously published Spotlight 60 on disguised remuneration schemes involving agency workers and contractors employed by umbrella companies. HMRC are aware that some umbrella companies operate more than one scheme, such as a standard compliant scheme and a non-compliant scheme. HMRC advise employees to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income.”
It is important to spread awareness of these schemes and to not get caught up in them. But, if you think you are involved in one, or know of someone who is, you can contact HMRC for assistance and guidance.