29 January 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 25 January 2024 with the addition of Purity Ltd.

HMRC has provided additional information regarding its interpretation of the scheme and how it works:

“Purity Ltd (‘Purity’) employees provide their services to an end client via a recruitment agency. The recruitment agency pays Purity for the work done by the employees. Purity then makes two payments to the employees. The first payment, a salary at the National Minimum Wage or National Living Wage rate, described on bank statements as ‘Purity Salary’ is made with Income Tax and National Insurance contributions (NICs) deducted. The second payment, described on bank statements as ‘Purity Adv’ is made without Income Tax and NICs deducted.

“HMRC’s position is that the untaxed payment described on bank statements as ‘Purity Adv’ is normal income, and Income Tax and NICs are payable on it. HMRC have 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 Purity 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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