Evidence to prove innocence - Disguised Employment

HMRC asks to submit bank statement dates back 10 to 12 years as evidence to prove no tax avoidance.

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One professional (Mr.A) is in trouble with HMRC, who is demanding tax on disguised employment income! Mr.A was served by an umbrella company provider in 2011 offering him to save tax by splitting his earnings as salary and loan payment. Without realising the risks, Mr.A signed the contract, but stopped the service after three months when he was advised of the risks by one of his friends. Mr.A received total of £ 20,000 during the three months, £ 5,000 as salary and £ 11,000 as loan with balance £ 4,000 taken by the provider as fee for their service. He paid tax on £ 5,000 only as salary income. Now HMRC sending him notice to pay tax on £ 300,000 of income wothout showing any calculation for the figure. Mr.A responded saying he only had this arrangement for three months and he was unaware of the issues as the agent told him the arrangement is legal. HMRC is asking for bank statement for 7 years from 2011, Mr.A never kept any copies of this. Requested copies from the bank who says they don't keep old bank statements therefore unable to help! How can I help Mr.A to convince HMRC that he paid due tax on all income received subsequent to the three months he had the arrangement with this umbrella company. He is aware that he need to pay tax on £ 11,000 treated as loan. He can prove the contract was cancelled after three months, but HMRC is refusing to accept this as sufficient evidence. Any helpful answers will be highly appreciated. Thanks in advance.

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