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HMRC helping contractors to spot tax avoidance schemes

4 December 2020: HMRC has launched a campaign to educate contractors on disguised remuneration schemes and working with the Advertising Standards Agency to tackle the promotion of such schemes online.

In a bid to prevent contractors from being taken in by attractive pay schemes that avoid tax, HMRC has launched a new campaign: ‘Tax avoidance – don’t get caught out’.

The campaign’s website is aimed at contractors and provides information on how to spot a tax avoidance scheme and what do if they have been offered a scheme. It also includes stories of individuals who used such schemes, outlining the warning signs they missed and the consequences.

ICAEW’s Tax Faculty urges members to share this information to help clients and other contractors aware of the potential perils of entering into disguised remuneration schemes and educate them on when to reach out for independent professional advice.

The campaign was launched on the same day that HMRC and the UK’s Advertising Standards Agency (ASA) published an enforcement notice outlining what websites promoting tax arrangement schemes must include in their marketing messages and what they cannot include.

For example, websites cannot include messages that state or imply HMRC or government approval for any tax arrangement being promoted. Meanwhile, they must clearly state information about the tax implications and risks of entering into the arrangement being promoted.

From 1 January 2021 the ASA will monitor websites marketing tax arrangement schemes and will enforce the rules outlined in the notice. Those that fail to comply could then face action from HMRC or a referral to Trading Standards.

The new activity aimed to help contractors came ahead of the government reporting on how it has implemented Sir Amyas Morse’s recommendations on the Loan Charge.

The scheme announced in 2016 aimed at closing down disguised remuneration schemes which used loans to avoid the payment of national insurance contributions and income tax. It applied a charge to such loan schemes entered into as far back as 1999.

Morse’s independent review of the charge published in December 2019 made 20 recommendations, including that it should not apply to loans before 9 December 2010.

The government accepted 19 of the recommendations and its new report, which fulfils one of these recommendations, outlines how it has implemented each of the others.