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HMRC names and shames tax avoidance scheme
by The Editor at 13:44 28/11/22 (News on Business)
HMRC has added umbrella company, Charteris Management Ltd (CML) to its list of tax avoidance schemes. However, the move has been described by one expert as ‘not going far enough’, with another urging the tax office to start calling out ‘the big players’.
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According to HMRC, the scheme operates in a way that users enter into an employment contract with Charteris Management Ltd (CML), providing their services to end clients through CML, sometimes via an agency. The scheme users may also sign a separate contract with a second party at the same time. CML will invoice the end client or agency for the work and, after deducting a fee, pay the scheme user a salary at, or just above the National Minimum Wage and then pay the remaining funds to the second party.

HMRC says this is disguised as an ‘introducer fee’, as CML claim the second party introduced the scheme user to CML. The second party, after deducting a fee, then makes a larger payment to the scheme user, which may be labelled as a ‘loan’, ‘option’, or something else. Tax and National Insurance contributions are not paid on the second payment to the user.

While CML claim the payment to the second party is an “introducer fee”, HMRC says this is not the case and these payments can clearly be seen as the balance of the amount the user raises on the timesheet they send to CML, most of which is to be paid on to the user by the second party and the rest retained by the second party as a fee.

HMRC has added CML to its 'list' because it says tax and National Insurance contributions have not been paid on this second payment to the user. The scheme is targeted predominantly at physiotherapists, radiographers, nurses and social workers.

CML’s website promises to 'guarantee our employees peace of mind and security. Let us make your contracting life easier'.

'Misconception'
Julia Kermode, founder of IWORK, a body that champions independent workers, said: “Tax schemes have a reputation for being sought by well-off people who want to pay minimal tax and maximise the efficiency of their money – this is a misconception. The reality is, these schemes often target average earners, such as NHS workers, who are feeling the pinch of wages not keeping up with inflation. Worse still, it’s the workers that are left with a tax bill, not the scheme.

“I can see the temptation for people to join a scheme – some do so knowingly – but all too often they are hard-working people duped into it because they need the money. These schemes must be stamped out. HMRC’s list is a start, but it simply doesn't go far enough. We need proper action to eradicate these dubious schemes once and for all.”

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Fred Dures, founder of payroll auditor, PayePass, said: "Charteris Management promises to make the lives of contractors easier when, in fact, the opposite is true. Tax avoidance schemes operating under the guise of umbrella companies pose a massive risk to anyone working with them – whether contractors, recruitment agencies or the end client.

“HMRC’s list of tax avoidance schemes is growing – which is a good thing – but given a number of these businesses no longer trade, in some cases the damage has already been done. What’s more, why isn’t HMRC calling out the big players? If the Government wants to be seen as serious about putting a stop to these schemes once and for all, it needs to shut down those doing the most harm.”

HMRC maintains a current list of named tax avoidance schemes, promoters, enablers and suppliers.

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The Editor

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