HMRC has again updated their list of named tax avoidance schemes and promoters, this time with the addition of Hive Umbrella Limited. This is the second update in the space of one week!
The basis of Hive Umbrella’s operation involves temporary/contract/agency workers receiving NMW and “Ad hoc Pay Advances”. This ‘advance’ represents an interest free debt (to Hive Umbrella) which is offset against a future bonus when Hive Umbrella decide to grant it to the worker, eliminating the debt. Advances are made to the user during each payroll cycle for their work, and an administration fee is charged by Hive Umbrella. Workers receives a single payment from Hive Umbrella which consists of two elements. The first element is the NMW salary which is subject to tax and NICs, plus a second element, described as ‘advance drawn down’ which is not taxed.
For the first time, HMRC has also published a list of five schemes subject to a stop notice. Unfortunately the schemes themselves are not named as legislation prevents them being named prior to a tax tribunal taking place. So HMRC’s list is restricted to describing the schemes and how they operate.
When HMRC issues a stop notice to a promoter, it means:
- the promoter who receives the notice must stop selling the specified scheme;
- the promoter who receives the notice must also pass a copy of it to certain associated persons, who are also subject to the stop notice and must also stop selling the specified scheme;
- all those persons subject to the notice must inform HMRC of all the people they have promoted the scheme to and any they continue to promote it to;
- the persons subject to the stop notice must inform all clients and intermediaries that they are subject to a stop notice, what this means, and provide them with a copy of the stop notice.
If a promoter fails to comply with a stop notice they can face penalties of up to £100,000 which can increase to up to £1 million in certain circumstances. The aim of stop notices is to reduce the number of schemes being marketed, and therefore protect people from becoming involved in them.