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tax avoidance letter from HMRC Early intervention team

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    tax avoidance letter from HMRC Early intervention team

    Hi All
    I have received a very worrisome letter from HMRC Early intervention team with headline

    You my have been involved in tax avoidance
    We're writing to you about the employment arrangements you had with Umbrellaworx Ltd
    Context:
    I used an umbrella company for the first time and on recommendation from my recruitment agency I chose UmbrellaWorx Ltd.
    As I was checking my payslips (weekly), I found something amiss ( only basic wage + second component) which raised the alarms. I could not keep track if they were paying right amount of tax/NI from payslips. As soon as I was sure they were not proper, I asked them questions re tax avoidance fraud. When they could not give me any answers, I terminated my employment with them and moved to PAYE with recruitment agency. So I have engaged with UmbrellaWorx Ltd for a period of 1 month (4 payslips).
    At the end, UmbrellaWorx provided me with P45 which I gave to next employer. I thought that was the end of it.

    Current:
    I have this letter from HMRC now which says I may have been involved in tax avoidance whicle employed with UmbrellaWorx.
    That I may end up being responsible in law for paying
    1. tax/NIC which was avoided
    2. "late payment interest" on the above amounts
    3. penalty based on the above amount
    The letter further says:
    "You must tell us if you think all the earnings from your employment have not had tax or NICs deducted from them under PAYE"
    Could someone please advise what should be my course of action. I have no clue as I have not dealt with any such issue. I have P45 from Umbrellaworx which I thought was good enough for HMRC. How can I know if they have made me a victim of tax avoidance scheme. And what should I reply to HMRC?

    Appreciate your time



    #2
    I would just tell HMRC you worked with them for a month and then got out when you realised it wasn't fully PAYE.

    Because it was only one month, any underpaid tax & nics will be modest. Interest will be negligible and I doubt they'll impose a penalty and, even if they do, it won't be much.

    You can work out what you should have paid by putting the gross income before any deductions (basic wage + other) into a tax calculator:
    https://www.uktaxcalculators.co.uk

    You could use an accountant, or tax advisor, to sort it out but you might end up paying them more than you owe HMRC.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

    Comment


      #3
      Be up front, they will calculate the missing NIC and tax and there will probably be no penalties. The other alternative would be to visit an accountant, but for 1 month it isn't worth it.
      I'm alright Jack

      Comment


        #4
        Originally posted by BlasterBates View Post
        Be up front, they will calculate the missing NIC and tax and there will probably be no penalties. The other alternative would be to visit an accountant, but for 1 month it isn't worth it.
        OP, this is great advice and for free. You had a lucky escape, just be honest with the revenue and you are likely to be just fine.
        Public Service Posting by the BBC - Bloggs Bulls**t Corp.
        Officially CUK certified - Thick as f**k.

        Comment


          #5
          Originally posted by hitchhikar View Post
          How can I know if they have made me a victim of tax avoidance scheme. And what should I reply to HMRC?
          As others said just be up front an honest with HMRC. You'll have to pay some of the missing tax, but you had a very lucky escape by paying attention.

          A point of note... You are not the victim. HMRC is the victim. You were a perpetrator, albeit unwittingly, of tax avoidance.
          Don't try and be the victim with HMRC as you're the one that's done wrong.
          See You Next Tuesday

          Comment


            #6
            Originally posted by Lance View Post
            A point of note... You are not the victim. HMRC is the victim. You were a perpetrator, albeit unwittingly, of tax avoidance.
            Don't try and be the victim with HMRC as you're the one that's done wrong.
            If the recruitment agency really did recommend this so-called "umbrella", then they want slapping down. Even if they weren't aware it was a tax scam, they shouldn't be recommending anything that they aren't 100% certain is a fully compliant PAYE brolly.
            Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

            Comment


              #7
              Originally posted by DealorNoDeal View Post

              If the recruitment agency really did recommend this so-called "umbrella", then they want slapping down. Even if they weren't aware it was a tax scam, they shouldn't be recommending anything that they aren't 100% certain is a fully compliant PAYE brolly.
              Good luck identifying those at the moment - I would struggle and I know what I'm looking for,

              I can name 2, one of which is helping me test the solution I'm working on to do just that and one that uses a monthly audit from the people chased off this scheme enquiry forum.

              merely at clientco for the entertainment

              Comment


                #8
                As I've not posted here before I also better answer the question.

                DealOrNoDeal is right - given the fact the OP picked up the issue immediately they have nothing to worry about

                They can just ask HMRC to calculator the amount owed and pay it with their self assessment tax return - to double check it Clarity's calculator is probably more than accurate enough (I like it as it works on a weekly / monthly total rather than stupid assumptions).
                merely at clientco for the entertainment

                Comment


                  #9
                  Thank you all for your kind words and advice. I am really shaken up. I tried to find further information regarding such early intervention team letter from HMRC but could not get any examples.
                  I am going to reply to HMRC and will send them my 4 payslips and P45 from Umbrellaworx and ask for further guidance from HMRC.

                  Is there any good in contacting Umbrellaworx before I reply to HMRC? If yes, what should I ask them?

                  Comment


                    #10
                    Originally posted by hitchhikar View Post
                    Thank you all for your kind words and advice. I am really shaken up. I tried to find further information regarding such early intervention team letter from HMRC but could not get any examples.
                    I am going to reply to HMRC and will send them my 4 payslips and P45 from Umbrellaworx and ask for further guidance from HMRC.

                    Is there any good in contacting Umbrellaworx before I reply to HMRC? If yes, what should I ask them?
                    Why talk to a bunch of scam artists that got you into this mess

                    Just ask HMRC to confirm what you owe and sort it out.

                    There is little to be gained (sadly from doing much more).
                    merely at clientco for the entertainment

                    Comment

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