HMRC is aware that unscrupulous promoters of tax avoidance schemes are targeting workers returning to the National Health Service (NHS) to help respond to the coronavirus (COVID-19) outbreak.
If you are returning to work for the NHS, HMRC is warning you to be very careful not to sign up to these schemes, which HMRC considers to be tax avoidance.
What these tax avoidance schemes look like
The schemes being offered all have some common features such as using an umbrella company, although they may be described differently. Usually, the wages will consist of 2 payments to you:
- The first payment is declared as earnings and will go through the umbrella company payroll, often at around National Minimum Wage levels or a flat rate payment for example, £100 per week.
- The second payment, the umbrella company will claim is not taxable – this payment may be described as a loan, annuity, shares, a capital advance involving mutual, joint or co-ownership, or a payment derived from a revolving line of credit facility, or some other non-taxable form.
All of these schemes have one thing in common which is to attempt to disguise the true level of your earnings, which would ordinarily be subject to Income Tax and National Insurance contributions.