HM Revenue and Customs has issued a fresh warning to workers, particularly contractors and agency staff paid through umbrella companies, to scrutinise their payslips for signs of tax avoidance schemes. The tax authority warns that many are lured by promises of higher take-home pay, only to later discover they owe thousands of pounds in unpaid tax, interest, and potentially penalties.
Red flags to watch for on your payslip
According to HMRC, the tell-tale signs of a tax avoidance scheme include money landing in a bank account that does not match the net pay figure on the payslip, and so-called “untaxed payments” dressed up as loans or advances rather than ordinary wages. Officials state the golden rule is simple: the amount hitting your bank account should always match your net pay as shown on your payslip. Any mismatch should ring alarm bells.
Nurses among those caught out
Among the victims is Chantelle, a nurse from Watford, who grew suspicious after noticing that pay from a new agency job was arriving in her account without any tax being deducted. She contacted HMRC directly for help after spotting the discrepancy. Another nurse, Tanya, a single mother, says she was persuaded to sign up to an arrangement that later left her saddled with a hefty and unforeseen tax demand. Duncan, an IT project manager, says he turned to an umbrella company simply to take the hassle out of his payroll paperwork, only to find, without checking the small print, that he had been enrolled in an avoidance scheme.
Individual responsibility under UK law
Crucially, HMRC insists that responsibility for paying the correct tax rests with the individual under UK law, even when someone else has managed their affairs and given poor advice. Those found to have used an avoidance scheme must pay the tax legally owed, plus interest, on top of any fees already handed over to whoever sold them the arrangement in the first place. However, the Revenue insists it is not on a mission to punish those who come forward. Anyone who suspects they may be caught up in a scheme is urged to contact HMRC as soon as possible, with officials promising support rather than “judgment” to help settle affairs, including, where needed, the option to pay off what is owed in instalments.
How to report a scheme
Workers who believe they have been mis-sold a scheme, or who know of one operating, can report it anonymously to HMRC using the code ‘TAC’ on its online form, or by calling 0800 788 887 (+44 (0)203 0800 871 from overseas). HMRC has also published a series of guides, including a risk checker tool and a rundown of the tactics scheme promoters allegedly fail to disclose, to help contractors and agency workers protect themselves before signing on the dotted line. Anyone concerned about their own tax position is advised to check their payslips carefully and seek guidance directly from HMRC.
