HMRC update Spotlight 45: Umbrella companies offering to increase your take home pay
Released 12 September 2018
HMRC have updated Spotlight 45 on umbrella company avoidance schemes to advise that HMRC cannot confirm whether an arrangement is legitimate or not.
Spotlight 45 Umbrella companies offering to increase your take home pay explains what taxpayers should do if they are employed by an agency or umbrella company that offers to reduce their tax liability and increase their take home pay. Most employment agencies and umbrella companies operate within the tax rules. However, some umbrella companies and agencies promote arrangements that claim to be a ‘legitimate’ or a ‘tax efficient’ way of allowing the taxpayer to keep more of their income by reducing their tax liability. Spotlight 45 explains that such arrangements are likely to result additional tax, interest and perhaps penalties becoming payable and are never HMRC approved. The Spotlight has been updated to advise taxpayers to seek independent professional advice if they are not sure whether they are involved in this type of tax arrangement as HMRC cannot advise on whether a company or agency is promoting a legitimate arrangement or not.