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Avoiding tax avoidance schemes: Advice for clients

11th Oct 2023
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Bright was created in 2021 when Thesaurus Software Ltd. and Relate Software Ltd. decided to join...
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When it comes to paying tax, we can all get a bitter taste in our mouth from time to time. And it’s probably safe to say that most of us have considered ways we can reduce our tax bill (I know I certainly have!). It’s for this reason that people can be extremely susceptible to tax avoidance schemes. Once people hear ‘reduce your taxes’ or ‘save money on your tax bill’, it’s hard to not get a little excited and jump at the opportunity. However, there are harsh consequences from HMRC if you’re found skipping out on taxes, whether it’s intentional or not. So, if you have clients who you suspect are involved or are considering becoming involved in a tax avoidance scheme, the information and resources listed in this article may make them think twice.  

Steering clear of tax avoidance schemes 

HMRC recently reiterated the importance of steering clear of tax avoidance schemes and their promoters. In April 2022, HMRC began publishing information about tax avoidance schemes, and their list has now grown to contain the details of over 60 schemes. It’s important that clients are aware of what to look out for and how to avoid getting caught up in a tax avoidance scheme, and the steps to take if someone you know is part of one.  

We should note that this list is by no means the final product and does not contain all the tax avoidance schemes currently being marketed. HMRC are constantly gathering information and data as they continuously update their list. What’s more, HMRC are also publishing information about some of the promoters’ company officers, as well as the marketing material used.  

Other useful resources 

HMRC are running a campaign – Tax avoidance - don’t get caught out – to help contractors spot the warning signs of tax avoidance, report suspicious companies, and get support to leave tax avoidance schemes. As part of this campaign, HMRC talked to victims of these schemes who shared their personal stories of what it was like for them to be caught up in tax avoidance, aiming to help others learn from their mistakes. 

Duncan’s story 

Duncan is an IT project manager who chose to use an umbrella company to help him manage his payroll admin. Unfortunately, as Duncan failed to double-check the details of the company, he ended up getting caught up in a tax avoidance scheme. Watch Duncan’s case study here

Tanya’s story 

Tanya is a single parent and a nurse. She was encouraged to get into a tax avoidance scheme, which left her with a large and unexpected tax bill. Watch Tanya’s case study here

What to do if a client is involved in a tax avoidance scheme 

If you believe any of your clients may be involved in a tax avoidance scheme and they are not already talking to HMRC about their tax position, you should advise them to get in contact with HMRC as soon as possible. They can start this process here. You can also report a tax avoidance scheme to HMRC here

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