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Nurses warned of tax avoidance schemes targeting agency staff

Those returning to help in COVID-19 effort also lured by schemes ‘too good to be true’
Mousetrap illustration used in HMRC campaign called Don't Get Caught by Tax Avoidance

Those returning to help in COVID-19 effort also lured by schemes that are ‘too good to be true’ HMRC says

‘Unscrupulous’ tax avoidance schemes are targeting agency nurses and those who have returned to help the NHS response to COVID-19, the government’s tax authority has warned.

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

What to do if you think you may be in a tax avoidance scheme

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 –

Those returning to help in COVID-19 effort also lured by schemes that are ‘too good to be true’ HMRC says

‘Unscrupulous’ tax avoidance schemes are targeting agency nurses and those who have returned to help the NHS response to COVID-19, the government’s tax authority has warned.

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

What to do if you think you may be in a tax avoidance scheme

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 warned of the trend in March 2020, as the NHS appealed for former registrants to return to practice to shore up the COVID-19 effort. By July 2020, the number of registrants joining the temporary register had reached 14,250.

HMRC director of counter-avoidance Mary Aiston urged any nurses who think they may be involved in such a scheme to leave as soon as possible and contact HMRC to settle their tax affairs.

‘Over the past year we have seen promoters of tax avoidance target NHS workers who returned to the front line to battle COVID-19,’ she said. ‘We are targeting those who promote these schemes using all of HMRC’s powers. We are also encouraging taxpayers to steer clear of tax avoidance schemes as part of our wider work to make it much harder for promoters to operate.’

Many tax avoidance schemes are operating as umbrella companies

HMRC estimates that overall, £600 million of tax revenue was lost to tax avoidance schemes in 2018-19, with 30,000 individuals and 2,000 employers involved in such schemes.

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.

In November, HMRC launched a campaign called Tax Avoidance: Don’t Get Caught Out to raise awareness of the risks of using tax avoidance schemes and how they may be sold (see box).

‘You don’t have to be a tax expert to know that if something claims you can take home 90% of your pay it is almost certainly too good to be true,’ Ms Aiston said.

‘If an arrangement requires you to pay big fees to the person selling it, yet very little tax to HMRC, it is probably one to steer clear of.’

How to spot a tax avoidance scheme, and what to do if you are in one

  • 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. These could be described as loans, annuities, bonuses or shares. These payments are no different from normal income and you still need to pay income tax and national insurance on them
  • You have been asked to sign more than one contract or agreement, and these do not state how your income will be paid or give a breakdown of deductions
  • You may be offered a ‘cash bonus’ for recommending a friend
  • Anyone who thinks they may be in tax avoidance scheme is urged to email exitsteam.counteravoidance@hmrc.gov.uk

Find out more

Tax Avoidance: Don’t Get Caught Out


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