Liquid Link Logo

HMRC and ASA join forces against tax avoidance schemes

HMRC has joined forces with Advertising Standards to act against misleading marketing by promoters of tax avoidance schemes.

The joint enforcement notice aims to disrupt the activity of promoters and protect people from being presented with misleading adverts which may tempt them into tax avoidance.

It requires promoters to be clear about the potential consequences of tax avoidance in any online advertisements. Immediate sanctions include having their paid advertising removed from search engines and follow-up compliance action, which can include referral to Trading Standards.

“Tax avoidance: don’t get caught out”

At the same time HMRC has launched its ‘Tax avoidance: don’t get caught out’ awareness campaign, warning and educating contractors about how to identify if they are being offered a tax avoidance scheme, and the pitfalls of using these schemes.

Jesse Norman MP, the Financial Secretary to the Treasury, said:

“The Government has made clear its determination to clamp down on the promoters of tax avoidance schemes.

“Today HMRC and the ASA are taking an important further step in this direction by action against misleading advertisements by promoters.

“As always, we would encourage people to pay close attention to HMRC’s warnings not to enter tax avoidance schemes. If it looks too good to be true, it almost certainly is.”

Jim Harra, Chief Executive and First Permanent Secretary of HMRC, said:

“We’re doing our part to close down these schemes and make it difficult for promoters, but we need the public to play their part too.

“You really don’t need to be a tax expert to spot an avoidance scheme – anything that sounds too good to be true almost certainly is, and anything which claims you can take home, say, 90% of your pay, or asks you to sign up to loans from an offshore trust just so you can be paid, is something to steer clear of.

“That’s why we’re starting a big push to encourage taxpayers to steer clear of tax avoidance schemes. This is part of HMRC’s wider work to make it much harder for promoters to operate.”

Miles Lockwood, Director of Complaints and Investigations, ASA, said:

“This notice serves as a clear warning to promoters of tax avoidance schemes – get your houses in order and ensure your ads comply with the law and our advertising rules or face enforcement action.

“There can be a real consumer detriment for those who unwittingly follow bogus tax avoidance advice – you could find yourself facing a significant tax bill. Working with bodies such as the HMRC is helping us to better protect consumers from misleading and unfair advertising that can leave them out of pocket.”

The ‘Tax avoidance: don’t get caught out’ campaign is asking the public to:

STOP – don’t sign anything that you are uncomfortable with or don’t understand.

CHALLENGE – check for warning signs. If you’re unsure, seek independent professional advice.

PROTECT – if you think you have been offered a tax avoidance scheme, report it to HMRC.

The “good umbrella” checklist

At Liquid Friday we genuinely welcome this action by HMRC and ASA. Tax avoidance scheme promoters and rogue umbrella companies are the nemesis of legitimate firms and blight the whole industry.

The key thing for contractors to remember is that all compliant umbrella companies must operate by the same rules - there are no loopholes and no magic formulas.

You can tell if an umbrella company is on the level by asking the following questions:

 - Are they UK owned and registered with no registered with no off-shore affiliations?

- Are they VAT-registered?

- Do they have over-arching employment contracts?

- Do they deduct full PAYE tax and NIC?

- Do they pay at least National Minimum Wage and only reimburse expenses above this?

- Do they pay statutory payments such as SSP?

It’s your wages and tax that they are handling, so don’t be afraid to dig a little - good companies have nothing to hide and will be happy to answer your questions.

Better still, stick with trusted industry names and companies that are accredited by the Freelancer & Contractor Services Association (FCSA).