01 February 2024

HM Revenue and Customs (HMRC) has added a new name to the current list of named tax avoidance schemes, promoters, enablers and suppliers.

The most recent update was on 1 February 2024 with the addition of Flex Payroll and Accounting Services Ltd and Paystone Services Ltd (also known as Artifact Services).

HMRC has provided additional information regarding its interpretation of the schemes and how they work:

“Flex Payroll and Accounting Services Ltd (Flex PAS) enters into a contract of employment with scheme users. The scheme users provide their services to the ‘end client’ and Flex PAS then invoice the end client for those services. Flex PAS pays an amount to the scheme users equivalent to the National Minimum Wage or National Living Wage with Income Tax and National Insurance contributions (NICs) deducted. Flex PAS also makes a second payment to the scheme user, described as an ‘advance payment’, with no Income Tax and NICs deducted.”

“Paystone Services Limited (PSL) pay scheme users a salary, which is approximately at the National Minimum Wage or National Living Wage rate, with tax and National Insurance contributions (NICs) deducted. However, they also receive a secondary payment without deduction of tax and NICs. This may be labelled as ‘Share payment’, ‘Option payment’ or something else. The secondary payment is the remaining balance of their contractual payment for the work carried out, minus a fee that PSL deduct for the operation of the scheme.”

HMRC has previously published information about the tax avoidance arrangements used by some umbrella companies Spotlight 60 HMRC are aware that some Umbrella Companies operate more than one scheme, for example, a standard compliant scheme and a non-compliant scheme. HMRC advise employees of Flex payroll and Accounting Services and Paystone Services 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.

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