tax avoidance schemes currently being marketed.HMRC never approves avoidance schemes or the compliance of any umbrella companies.įind information about known tax avoidance schemes and about the people involved in the supply and marketing of them. Some umbrella companies or people promoting them claim that their tax arrangements or tax avoidance schemes are HMRC approved. What we publish about tax avoidance schemes and those promoting them However, where this does not happen HMRC may, in some circumstances, recover the tax directly from you. Under PAYE regulations your employer has an obligation to deduct tax and National Insurance contributions from your employment income on your behalf. Any tax you owe will be in addition to this. You may also find that the umbrella company has deducted a fee (this may be called a margin) from your earnings for using their services, which could be higher than the standard fees. Most tax avoidance schemes simply do not work and anyone who uses them is at risk of ending up with a large tax bill. You are responsible for your own tax affairs and for paying the correct amount of Income Tax and National Insurance contributions. Using these non-compliant umbrella companies could leave you at risk of being involved in a tax avoidance scheme, and owing HMRC money, even if you did not set out to try to avoid tax. For example, an umbrella company might want to claim that a payment is non-taxable to try to avoid paying employer National Insurance contributions ( NICs) on it - currently 15.05% of the payment. Some umbrella companies benefit financially by using contrived arrangements like disguised remuneration to pay workers. These arrangements are tax avoidance schemes and most of them do not work. Many umbrella companies are compliant with the tax rules, but some use contrived arrangements that claim to allow agency workers and contractors to keep more of their earnings.
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