Letter from HMRC regarding possible involvement in Tax avoidance

[BrickWall5]

3. Surprised you only received this letter today ?... christ you have about 2 weeks to settle. Go speak to an advisor on this and share all your documentation. Its goiong to be painful and you will mostl likely pay the back tax on that 2/3 income. You will have to write off the % charge on your gross income as I think your Umbrella will disappear into thin air and HMRC aint interested in persuing them when you or we are such easy meat.

I have forwarded all info i have regarding this and raised concern to the End client for whom i work via that Umbrella. The thing is that I have worked for them in the past as a permie for the last almost 20 years and as I didn't want to lose this job (neither they wanted to lose me), when i moved to the UK from different country I decided to work for them as a contractor via umbrella. To cut story short that's how it all started. I got reply from my company (End client) that their law guys will be looking into the agreement and all the situation now, so i still have some hope that maybe they will be able to help as well in this situation.

[lowpaidworker]

I don't think this is a loan charge issue - there are plenty of "schemes" tax avoidance scams doing the rounds at the moment - we saw one a couple of weeks ago that seems to have duped the FCSA audit system...

yeah the go speak to an advisor kinda covers this. Stinks of something that HMRC will ask you to declare and chase without knowing the details.

I guess i cant believe these schemes are still seeping out the woodwork like one smelly rat. I really cant believe that not one Tax advisor or QC opinion linked to these tax avoidnace schemes for PAYE has been held to account with and I quote "your fair share of tax" for some of this.

I was speaking to my MP very recently who said HMRC/Treasury are not changing their mind on this and in a few years well see a proper independent review where those that designed these schemes or promoted them will be held properly accountable. But for now you will need to settle. I cant wait for that review but I fear it will be too late for many

[lowpaidworker]

I have forwarded all info i have regarding this and raised concern to the End client for whom i work via that Umbrella. The thing is that I have worked for them in the past as a permie for the last almost 20 years and as I didn't want to lose this job (neither they wanted to lose me), when i moved to the UK from different country I decided to work for them as a contractor via umbrella. To cut story short that's how it all started. I got reply from my company (End client) that their law guys will be looking into the agreement and all the situation now, so i still have some hope that maybe they will be able to help as well in this situation.

they the Umbrella will disappear and reinvent themselves in a new name but same old handshake... if you get my drift.

Its good your firm will look into this. Probelm is for 20 odd years most end clients could not be bothered.

[webberg]

If your take home is more than around 65% of your gross payments, chances are the full amount of tax is not being deducted.

If so, HMRC will call foul and launch an enquiry.

If your umbrella is telling you that that have some fancy and complicated plan why you pay less tax - ask them to explain it in writing and take it to any half way competent tax adviser.

Or, save yourself some money and time - move on from the umbrella.

[Superfly]

The variance in take home pay between legitimate umbrella companies should not be that great. The tax itself is driven by legislation from central government so theoretically that should all be the same, regardless of whichever umbrella company you decide to go with. The main difference would be the margin that the umbrella charges. In a perfect world, this would be the only question you would need to ask the umbrella company when choosing your payroll solution. But the difference in margin itself should not be too great between umbrellas and you may end up saving a few hundred pounds over the year by shopping around. But certainly it should not be a case that one umbrella quotes a take home of 72% while another quotes 85 or 90%, this should get the alarm bells ringing if they are quoting very high percentage which are not in the ballpark of the vast majority of PAYE umbrellas. There may also be a further variance in how much an umbrella company pushes the boat out in terms of expenses and whether you are comfortable with this, again this may be reflected in what they term as the take-home percentage. Finally, the umbrella company may be able to facilitate payments into a personal pension. They may even include this in the % that you get, so a quote of a high percentage may be assuming payment into a pension plan.

[newandconfused]

Me too

I have received a similar letter and advice I received from my umbrella employer is also similar-HMRC and phishing.

My salary remuneration is minimum wages which is taxed and a large amount received as a commercial loan.

I have paid my taxes properly all these years and am in this scheme for a year now.

I have my self assessment to do this year.

I just want to give up everything and retire- too long to go before I can do that.

Any advice ?

[Delendog]

I have received a similar letter and advice I received from my umbrella employer is also similar-HMRC and phishing.

My salary remuneration is minimum wages which is taxed and a large amount received as a commercial loan.

I have paid my taxes properly all these years and am in this scheme for a year now.

I have my self assessment to do this year.

I just want to give up everything and retire- too long to go before I can do that.

Any advice ?

the commercial loan you have received what is the interest rate can you prove you are making payments from your bank account and they are not just being returned to you etc etc

[cojak]

I have received a similar letter and advice I received from my umbrella employer is also similar-HMRC and phishing.

My salary remuneration is minimum wages which is taxed and a large amount received as a commercial loan.

I have paid my taxes properly all these years and am in this scheme for a year now.

I have my self assessment to do this year.

I just want to give up everything and retire- too long to go before I can do that.

Any advice ?

Leave the umbrella ASAP and get yourself into a legitimate umbrella.

[eek]

the commercial loan you have received what is the interest rate can you prove you are making payments from your bank account and they are not just being returned to you etc etc

Completely irrelevant - HMRC will be treating it as untaxed income.

Leave this umbrella, find a proper one (see the umbrella forum for ideas) and start saving to pay the tax bill HMRC are about to send you.

[Albert49]

I have received a similar letter and advice I received from my umbrella employer is also similar-HMRC and phishing.

My salary remuneration is minimum wages which is taxed and a large amount received as a commercial loan.

I have paid my taxes properly all these years and am in this scheme for a year now.

I have my self assessment to do this year.

I just want to give up everything and retire- too long to go before I can do that.

Any advice ?

As others have said move asap to a reputable umbrella, you can't do much about last year's tax, but if you have the funds you might want to consider making a pension contribution equal to the loan amount received this year, or at least the amount of your total income this year (including the loans) over 50k . If you can manage the first any tax payable on the loan will go into your pension, if the 2nd then any 40% rate tax will go into your pension.
I would also suggest you consider doing this soon in case the chancellor decides to cut pension tax relief to pay for Covid19.