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Agency nurses targeted by ‘unscrupulous’ tax avoidance schemes

HMRC warns that majority of these plans do not work and nurses often end up paying more

HMRC warns that majority of arrangements from umbrella companies, usually advertised via social media, do not work as nurses end up paying more money

Agency nurses have been warned to be wary of ‘unscrupulous’ tax avoidance schemes.

Nurses and other contract healthcare staff are being targeted by umbrella companies – often via online or on social media – promising higher take-home pay, lower tax bills and less paperwork, says HM Revenue and Customs (HMRC).

Yet it says the majority of these schemes do not work, resulting in individuals having to pay back the tax they should have paid in the first place, plus interest and potentially a penalty. This is on top of fees they may have paid for joining the scheme.

    HMRC warns that majority of arrangements from umbrella companies, usually advertised via social media, do not work as nurses end up paying more money

    HMRC warns that majority of arrangements from umbrella companies, usually advertised via social media, do not work as nurses end up paying more
    Picture: HMRC

    Agency nurses have been warned to be wary of ‘unscrupulous’ tax avoidance schemes.

    Nurses and other contract healthcare staff are being targeted by umbrella companies – often via online or on social media – promising higher take-home pay, lower tax bills and less paperwork, says HM Revenue and Customs (HMRC).

    Yet it says the majority of these schemes do not work, resulting in individuals having to pay back the tax they should have paid in the first place, plus interest and potentially a penalty. This is on top of fees they may have paid for joining the scheme.

    Crucial that nurses leave tax avoidance schemes as soon as possible, says HMRC

    An estimated half a billion pounds in tax revenue was lost to marketed tax avoidance in the UK 2019-20, according to HMRC.

    In 2020, the agency warned staff who had returned to help the NHS response to COVID-19 were also being targeted by the schemes.

    HMRC director of counter-avoidance Mary Aiston said it was crucial that any nurse who thinks they may be involved in such a scheme to leave as soon as possible.

    ‘If you think you are in a tax avoidance scheme, contact us and we’ll help you get on the right track,’ she said.

    ‘We won’t be judgemental and if you can’t afford to pay everything in one go, we may be able to offer you an instalment arrangement.’

    If scheme looks too good to be true, then it probably is

    Many tax avoidance schemes are operating as umbrella companies, which collect a worker’s earnings from their hiring firm or recruitment agency, then pay them a salary after deducting tax and national insurance.

    She added that if a scheme looked too good to be true, then it probably was.

    ‘You don’t need to be a tax expert to spot an avoidance scheme. If you’re offered higher take home pay simply for rearranging how it reaches you, for example as a non-repayable loan or as a trust payment, it almost certainly is tax avoidance.’

    How to spot a tax avoidance scheme

    • The scheme allows you to keep more of your income than you would expect, with little or no deductions for income tax and national insurance contributions
    • Some or all of the payments are said to be non-taxable, and are described as loans, annuities, bonuses or shares.
    • You are asked to sign more than one contract or agreement, which do not state how your income will be paid or give a breakdown of deductions
    • Think you might be in a tax avoidance scheme? Email exitsteam.counteravoidance@hmrc.gov.uk
    Click here to find out more from HMRC


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