HM Revenue & Customs is currently calculating Income Tax for the 6 April 2018 to 5 April 2019 financial year. If your umbrella service company has not, on your behalf, paid in full the tax you owe you will be contacted by the tax office or HMRC and you will be asked to bring your tax affairs up to date, including paying any outstanding tax and National Insurance contributions.
We have been advised that a special section has been set up by HMRC to investigate various tax avoidance schemes provided by umbrella companies posing as an employer.
BASW is strongly advising members working through an umbrella to not wait to be contacted by HMRC and to take action now.
- Verify tax paid to date - If you’re being paid PAYE, you can access what income tax and National Insurance you have paid (within a week). Simply register log-in at www.gov.uk/personal-tax-account or download the HMRC app available for iOS and Android.
- Compare these figures with your P60 and payslips
- Should you discover part or all of your owed tax has not been paid
- Contact your umbrella and request the deducted tax be submitted to HMRC on your behalf
- Report immediately to HMRC
- Engage a tax professional to act on your behalf
- Create an email audit trail and take thorough notes
- Unless there is an error in calculation, tax owed will have to be paid so don’t neglect the situation
- Be informed
- Red flags to be aware of:
- Is part of your income being paid to you as more than just Basic Pay and Holiday Pay?
- Has your tax code changed?
- Have you been notified of TUPE?
- Has your umbrella service company gone into liquidation?
If you’re affected, BASW would like to hear from you either through our brief consultation and/or contact Independents.
HMRC calculates Income Tax for the previous tax year between June and October. Therefore, we are anticipating several members to be contacted within the next couple of months.
- HMRC Guidance: Umbrella companies offering to increase your take home pay [published 23 August 2018]
- Disclosure of tax avoidance schemes overview
- Disclosure of tax avoidance schemes (DOTAS) Guidance
- Find out more on abusive tax arrangements
- Meaning of tax arrangements
- Find out more on the HMRC drive to tackle tax avoidance