NHS staff who are being encouraged to join tax avoidance schemes won’t have any clue that they are highly aggressive, unlikely to work and risk getting high tax bills and penalties.
Heather Self, a partner at Blick Rothenberg said: “It’s an absolute disgrace that at a time when we are relying on thousands of NHS staff to keep this country safe that unscrupulous promoters are offering schemes which put these workers at risk of losing money and falling foul of HM Revenue & Customs (HMRC).”
Heather added: “This is why HMRC last night issued a strong warning to people returning to the NHS to beware of being offered these schemes. What we don’t know is whether any staff, who are under real pressure at the moment, have taken them up. Any NHS staff who believe that they have signed-up to something like this, thinking that it was legal and would save them money, should immediately contact HMRC and let them know.”
Fiona Fernie, a Tax Dispute Resolution partner said: “The proposals involve workers receiving their pay in two parts: the first (and generally much smaller) part is a flat rate payment made through the payroll and subjected to tax and NIC in the normal way. The second part is badged as a loan, annuity, shares or something similar which the individual is told is not taxable. The payments are often made using a company known as an ‘umbrella company’.”
She said: “Such schemes have been used for a number of years in other sectors, including the construction and IT industries, and HMRC have been advising that they do not work and constitute tax avoidance. It is astonishing that after such a prolonged attack on these arrangements by HMRC, returning NHS workers are now being targeted to use them by the scheme promoters. It is also of particular concern that the main targets are individuals who are unlikely to have experience which would warn them of the dangers of these schemes and who are going out of their way to be good citizens.”
Simon Rothenberg, a senior manager at Blick Rothenberg said: “It is very disappointing that people appear to be taking advantage of returning NHS workers who, in many instances, are coming out of retirement to help the country. These unscrupulous companies are trying to disguise the income which the returning workers are earning as loans and/or advances which may not be taxable. These are being advertised to give the returning staff 80% to 85% of their gross pay in their pocket which may be the case initially, but HMRC are likely to find out about these schemes and, potentially, pursue the workers, as well as the umbrella companies, for the correct level of taxation.”
He added: “It is pleasing to see that HMRC have been very quick to issue guidance on the umbrella companies’ scheme and I hope that, despite their significantly increased workload, they continue investigating and clamping down on such operators.”
“I fear that this may be the tip of the iceberg in terms of people trying to take advantage of the circumstances surrounding COVID-19 and suspect we may see other schemes and tax evasion being discovered in the coming weeks and months, including people possibly taking unfair advantage of the Coronavirus Job Retention Scheme.”
Would you like to know more?
If you would like to discuss any of the above guidance or have other queries about how you can make the right decisions for the future of your business and your income, please contact your usual Blick Rothenberg contact or one of the contacts to the right.
You can also visit our Coronavirus – Practical Guidance for businesses today Hub for our latest updates and insights.