The coronavirus pandemic has pushed the UK’s National Health Service (NHS) to the limit, but sadly health workers also have financial issues to worry about.
HM Revenue and Customs (HMRC) said it is aware that promoters of tax avoidance schemes are targeting workers returning to the NHS to help respond to the covid-19 outbreak.
The UK tax collector is warning those returning “to be very careful not to sign up to these schemes, which HMRC considers to be tax avoidance”.
Falling foul
Heather Self, a partner at tax and advisory firm Blick Rothenberg, said: “It’s an absolute disgrace that at a time when we are relying on thousands of NHS staff to keep this country safe that unscrupulous promoters are offering schemes which put these workers at risk of losing money and falling foul of the HMRC.
“What we don’t know is whether any staff, who are under real pressure that the moment, have taken them up.
“Any NHS staff who believe that they have signed up to something like this, thinking that it was legal and would save them money, should immediately contact HMRC and let them know.”
Details
The schemes being offered all have some “common features”, including using an umbrella company, although they may be described differently.
HMRC said, usually, the wages will consist of two payments to NHS staff:
- 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;
- The second payment, which the umbrella company will claim is not taxable, 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.
HMRC said: “All of the schemes have one thing in common and that is to attempt to disguise the true level of your earnings, which would ordinarily be subject to income tax and national insurance contributions.
“Some umbrella companies may offer vague explanations of how the schemes work, for example, using your personal allowance more efficiently, and often claiming that you can take home 80% to 85% of your pay.”
The pay slips provided by the umbrella company may also be misleading, they may show one or both of the following:
- The first payment only; and
- Inaccurate deductions.
Astonishing
Fiona Fernie, tax dispute resolution partner at Blick Rothenberg, said: “Such schemes have been used for a number of years in other sectors, including the construction and IT industries, and HMRC have been advising that they do not work and constitute tax avoidance.
“It is astonishing that after such a prolonged attack on these arrangements by HMRC, returning NHS workers are now being targeted to use them by the scheme promoters.
“It is also of particular concern that the main targets are individuals who are unlikely to have experience which would warn them of the dangers of these schemes and who are going out of their way to be good citizens.”
