HMRC Spotlight on tax avoidance – a disguised remuneration scheme

In March 2017 HMRC added a new scheme, number 37, to their list of tax avoidance schemes currently in the Spotlight 

The latest scheme, Disguised remuneration: job board avoidance scheme attempts to avoid Income Tax and National Insurance contributions (NICs) by paying contractors in the form of redeemable loyalty points. 

Under the scheme a  contractor becomes an employee of an umbrella company and is then paid in two parts. The first part is a small basic wage with little or no tax and NICs deducted. The second part of the payment is used to advertise the contractor’s services on a job board. 

The contractor immediately receive loyalty points in return for keeping their details on the job board. The loyalty points can be cashed in by the contractor/employee shortly afterwards, with no deductions made for tax or NICs. The contractor/employee usually has to pay a large fee to the third party running the job board.

HMRC has said that they will challenge all users of this scheme and investigate their tax affairs. They will also challenge any umbrella company operating this scheme. They are also considering whether to take action against such schemes under the General Anti-Abuse Rule (GAAR).