The Sunday Times published a table this weekend showing the “biggest tax avoiders by location” , showing that the area with the most individuals that have used an avoidance scheme (per capita) is Barking and Dagenham in east London. The article does go on to point out that scheme promoters are actively targeting middle earners. However, what it doesn’t make clear is that it’s the user of the individuals’ services that are actually targeted in most cases. It’s generally agency-type workers that are affected, e.g. locum nurses in the NHS. In many cases, these workers don’t get to choose whether they are paid through the scheme or not. If they undertake work for an engager who has decided to use a scheme, their only choice is whether to work for that engager or not. Notwithstanding this, the unfortunate worker will face investigation from HMRC with potentially years of enquiries to look forward to.
The type of schemes promoters are looking to use involve umbrella companies paying workers using a mix of a small salary and a “loan” that is purportedly not subject to tax or NI. HMRC maintains that these schemes do not work and has been overwhelmingly successful at convincing the courts of this.
If your engager or employer tries to convince you to sign up for a payment method that involves an unknown third-party company, and promises that you will keep an unrealistic percentage of the amounts paid, it is probably a tax avoidance scheme.