“Unscrupulous” companies are promising NHS employees large financial savings via tax dodging schemes that might go away them out of pocket.
The companies, which function on the fringes of the regulation, goal key employees drafted in to assist with the coronavirus disaster, a BBC Money Box investigation discovered.
Social media adverts push employees towards some umbrella corporations that take a hefty lower of their salaries.
In return, these corporations conceal a portion of their pay from the taxman.
But Her Majesty’s Revenue and Customs (HMRC) has mentioned signing up with these companies, which it described as “unscrupulous”, may go away key employees dealing with massive, surprising tax payments.
One advert on Twitter says: “If you’ve been drafted in to reinforce the NHS response to the #coronavirus pandemic, we want to assist you.”
When working legitimately, working via an umbrella firm could make it simpler to tackle jobs for a number of employers directly.
The employee has their wage paid to the umbrella firm, which then pays tax, National Insurance and different deductions on their behalf. After taking a payment, the umbrella firm will then pay the employee what’s left.
But one firm instructed Money Box that it was doable to save lots of 1000’s of kilos a yr legally by hiding a big chunk of a employee’s wage from the taxman.
Posing as a healthcare employee on a wage of £145 a day, our reporter was instructed by Dark Blue Professional, a UK-registered umbrella firm, that they may take home 78% of their wage, which is greater than they might have made via a normal umbrella firm.
Kay from Dark Blue Professional defined how the scheme works: “You receive one payment which is a PAYE [pay as you earn] salary payment, that’s taxed and you receive a payslip – and the residual balance is then paid as an investment payment.”
“You receive your second amount into your account…and because it’s done that way there is no tax liability on the second proportion,” she instructed us.
As a outcome, a healthcare employee incomes £725 per week would be capable of pocket £60 greater than in the event that they used a normal umbrella firm.
But what Kay didn’t say is that Dark Blue Professional would take £80 per week in charges, 4 occasions the business customary, and that the federal government can be cheated out of as much as half the tax that it ought to have obtained.
Kay insisted the scheme is tax compliant. But comparable kinds of scheme have been challenged by HMRC prior to now, which has left 1000’s of employees with crippling tax payments.
Some even confronted dropping their houses, leaving their funds in tatters.
Responding to the findings of Money Box investigation, Judith Freedman – professor of taxation regulation and coverage at Oxford University – mentioned: “There’s a strong likelihood that HMRC will challenge them [the schemes] successfully.””Not only could the individual taxpayers be left with a big tax bill and a lot of hassle, but they have already paid relatively large fees to the promoters, so they are much worse off than they would have been doing things in a straightforward way,” she mentioned.”It is distressing that people are trying to sell these schemes with…minimal explanation of the risks. Everything possible needs to be done to stop the firms doing this before ordinary taxpayers get caught up in it.”
‘Government does not prefer it’
Money Box additionally spoke to a dealer from Contracting Scout, which actively targets key employees with adverts on Twitter and LinkedIn.
“Tim”, from Contracting Scout, provided to signal us up with an umbrella firm additionally providing 78% take home pay.
He defined that the umbrella corporations he works with “are taking advantage of a few tax loopholes” and admitted that “the government doesn’t like it”.
“They [the government] do attempt to legislate towards it, however laws is extraordinarily gradual, so as soon as the brand new laws strikes in there is a hundred completely different umbrellas that pop up subsequent week with a special sort of cost construction which does not get captivated by the regulation.
“So the goal posts are always moving and the providers are always trying to cater to that,” he mentioned.
Neither of the 2 corporations responded to the findings of our investigation.
An HMRC spokesperson instructed Money Box “it’s stunning that unscrupulous promoters of tax avoidance schemes are concentrating on returning NHS employees throughout this tough time. HMRC printed [advice] on 30 March warning returning employees about this very concern.
“Our advice has always been to steer well clear of such schemes, and to report them to us in confidence for investigation”.