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Umbrella company schemes under the spotlight.
Taxpayers employed under tax-saving arrangements set up by agencies and umbrella companies may be caught up in avoidance schemes, HMRC is warning.
It states in Spotlight 45 that ‘most employment agencies and umbrella companies operate within the tax rules’ but some arrangements that claim to be a ‘legitimate’ or ‘tax-efficient’ way of keeping more of the worker’s income by reducing their tax liability are never HMRC approved. These schemes are likely to result in the taxpayer paying additional tax, interest and perhaps penalties, because they are ultimately responsible for paying the correct tax and National Insurance contributions.
The spotlight describes how the arrangements operate, the risks of using the schemes, and action to take if taxpayers are involved in them.
