ESR Portal Helping NHS Employees To Steer Clear Of Tax Avoidance
Since October 2023, the ESR service team has been working with HMRC to raise awareness and educate NHS employees about tax avoidance.
You may have noticed that the ESR portal dashboard has hosted a portal announcement for HMRC, targeted at temporary workers, bank staff, contractors, agency workers and anyone working through an umbrella company. The announcement generated a significant boost in the number of views to HMRC’s campaign page - a staggering 82,000.
HMRC Tax Avoidance Umbrella company portal message
Employees clicking the portal announcement were taken through to the HMRC campaign page where they found information to help them steer clear of tax avoidance schemes. The campaign had helpful information from guidance, online tools, and even some personal stories of people who have unfortunately been caught out. HMRC advises the following:
What is tax avoidance?
Tax avoidance are arrangements where people pay less tax than they should. While some arrangements are presented as compliant, many are later found not to achieve the tax outcomes promised.
Individuals who enter into tax avoidance schemes may ultimately be required to pay the tax that HM Revenue & Customs (HMRC) determines is due, along with interest and, in some cases, penalties. This can be in addition to any fees paid to participate in the scheme.
How do tax avoidance schemes work?
Tax avoidance schemes often involve third parties, such as umbrella companies, structuring a worker’s pay in unconventional ways. This may include receiving part of their income as a loan, salary advance, grant, annuity, or similar payment that is described as non-repayable and presented as non-taxable. These arrangements are typically promoted on the basis that they increase take-home pay, sometimes with limited explanation of how this is achieved.
In many cases, such schemes have been challenged by HMRC and found not to deliver the intended tax treatment when tested in the courts and tribunals.
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The impact of tax avoidance is real and could be serious, so it’s important not to ignore the problem. People are often taken in by the financial benefits on offer, including Tanya, a nurse who was encouraged to get into a tax avoidance scheme, which left her with a large and unexpected tax bill. Tanya and Duncan have shared their stories which you can access on the HMRC campaign page.
HMRC Tax Avoidance don\'t get caught out portal message
HMRC are clear that if an umbrella company makes you an offer that sounds too good to be true, you should take time to consider it carefully and ask for full details.
HMRC wants to stop people being drawn into such schemes as well as help them leave tax avoidance schemes if they believe they might be caught up in one. One of the best ways to do this is to educate employees about the risks of tax avoidance schemes operated by non-compliant umbrella companies and the warning signs that HMRC advises to watch out for include:
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if you get a separate payment which you are told is not taxable;
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if you get more money paid into you bank account than is shown on your payslip;
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if you get a payment from someone other than your umbrella company, which has not been taxed;
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if you get asked to sign another agreement in addition to your employment contract.
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If you become aware of a tax avoidance scheme or an agency or umbrella company that is not following the tax rules, you should take action to report this to HMRC.
How can you help?
NHS managers, colleagues and stakeholders can help direct staff to the campaign at any time, and HMRC is encouraging organisations to share this important information. This will help staff understand their pay arrangements, so they can learn how to identify, leave and report a tax avoidance scheme.
There is also a helpful HMRC list of named tax avoidance scheme promoters. The list is not exhaustive so if an umbrella company is not shown, this does not mean that they are not operating a tax avoidance scheme, or the scheme is in any way approved by HMRC. HMRC does not approve tax avoidance schemes for use. A short You tube video called ‘Umbrella companies: what are the risks to contractors?’ highlights the risks to contractors using umbrella companies and the possible warning signs that indicate they may be operating a tax avoidance scheme.