29 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 29 February 2024 with the addition of Abchurch Ltd, Procorre LLP and React Administration service Limited.
HMRC has provided additional information regarding its interpretation of the schemes and how they work:
Abchruch Ltd
“Individuals provide services to end clients as employees of Abchurch Ltd. Employees receive part of their Abchurch Ltd remuneration at a rate close to the National Minimum Wage or National Living Wage with Income Tax and National Insurance contributions (NICs) deducted. Employees receive the balance of their remuneration, disguised as a loan, credit, or other payment without Income Tax or NICs deducted.”
Procorre LLP
“Scheme users and their personal service companies (PSCs) join and become members in Procorre LLP (Procorre). The PSC’s then enter into contracts to provide the services of the scheme users to end clients. The PSC’s invoices the end clients [on behalf of Proccore] and transfer the income received to Procorre. Procorre return the income to the PSC’s and the users after deducting a fee. The income is returned via direct payment to the PSC’s bank accounts, and in the form of untaxed drawings, pre-paid expense cards and business development fund payments all provided by Procorre.”
React Administration service Limited
“The scheme user enters an employment contract with React Administration Services Limited (RASL) and provides their services to an end client. RASL then makes a single payment to the scheme user for their services, but this is artificially separated into two elements. The first element is a salary paid at or around National Minimum Wage or National Living Wage with tax and National Insurance contributions (NICs) deducted. The secondary element is described as a ‘propelled payment’ with no tax and NICs deducted.”
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 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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