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HMRC’s spotlight 60 discusses the ‘contrived arrangements’, such as disguised remuneration schemes, used by some umbrella companies which allow agency workers and contractors to keep more of their earnings.
It highlights some warning signs of tax avoidance schemes. These include being asked to sign more than one contract; offering an enhanced amount of take-home pay, or describing the arrangement as ‘tax efficient’, with some elements described as ‘non-taxable’; or payments to individuals being made partly under PAYE and partly using other arrangements which are not disclosed on the payslip.
The spotlight also warns that umbrella companies operating tax avoidance arrangements often keep more by way of a fee or margin than compliant umbrella companies.
