HMRC crackdown on agency staff
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- Published: Tuesday, 24 October 2017 07:51
- Written by News Editor
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HM Revenue & Customs is cracking down on tax avoidance schemes sold to agency staff, who themselves cost the NHS £3bn a year, according to a report in the Sunday Times. They have launched an investigation into tax avoidance schemes being sold to NHS agency doctors and nurses with claims they can take home up to 90% of their pay.
Officials says some of the schemes are similar to those offered to celebrities to help them cut their tax bills. NHS trusts are being warned they face fines if they have facilitated the use of such schemes. An HMRC document, circulated among NHS trusts, states: “We have many [schemes] already under inquiry and others about to be investigated. Significant HMRC resources [are] being targeted here. Individuals, NHS hiring managers and trusts [are] taking financial risk if they use non-compliant structures.”
The NHS spends more than £3bn a year on agency staff. New regulations introduced in April, known as IR35 rules, require NHS trusts to help ensure staff who are not on the payroll pay the correct amount of tax. The workers can be paid directly by the NHS, which would then deduct income tax and national insurance, or by “umbrella” companies or intermediary firms. Industry sources say there has been a proliferation of umbrella companies offering tax avoidance, typically using offshore structures and loans.
One firm, Knight Wolffe, has been promoting “tax trusts” since April 2016, claiming they are suitable for doctors and dentists. It offers a five-page guide, entitled “How to pay up to 80% less tax . . . and without breaking the law” and also says it can “remove your IR35 liability”. HMRC successfully challenged the promotion of the scheme with a complaint to the Advertising Standards Authority, upheld in September. It said the material incorrectly implied endorsement by HMRC. In fact, the schemes did not work.
According to a tax official: “These types of schemes are Munchausen fantasy tax arrangements. The rub is that users will assume that because we don’t challenge them immediately, then all is well. The reality is that anyone who uses these types of schemes will face an inquiry by HMRC.”
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