Umbrella Union to be wound up after HMRC tax avoidance accusation
A Liverpool-based contracting company accused of promoting tax avoidance is to be wound up after appointing liquidators, City AM can reveal.
The firm, called, Umbrella Union, described itself as an “umbrella contracting company” which “can help you comply with financial regulations whilst remaining self employed.”
In October last year, HMRC added the company to its list of “promoters” of tax avoidance.
According to the tax collector’s analysis, employees of Umbrella Union received part of their remuneration as a salary, paid at or close to the minimum rate permitted, that is subjected to deductions for income tax and national insurance contributions (NICs).
Employees then also receive a secondary element of their remuneration that is not subjected to the deduction of income tax and NICs.
‘Disguised remuneration schemes’
“HMRC’s view is that both elements of the payment should be treated as ‘normal income/as the user’s salary’, and therefore subject to tax and NICs,” HMRC said, adding that it had published guidance on “disguised remuneration schemes involving agency workers and contractors employed by umbrella companies.”
“HMRC are aware that some umbrella companies operate more than one scheme, such as a standard compliant scheme and a non-compliant scheme. HMRC advises employees of UUL to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted from their income.”
“If you’re using this scheme, get in touch for help to exit.”
The company appointed liquidators Antony Batty & Company LLP on Tuesday, a notification filed on Friday showed.
Umbrella Union did not respond to a request for comment.
HMRC estimates that tax evasion cost the UK £5.5bn in 2022–23. This is increasing among small businesses, with an estimated 81 per cent of tax lost due to evasion in 2022–23 arising from small businesses, up from 66 per cent in 2019–20.
A House of Commons committee report published in February said it was “concerned that HMRC is not sufficiently curious about the true scale of tax evasion.”