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If you are looking for an umbrella company to take care of your payroll, you must choose a compliant provider, and not a tax avoidance scheme. The opportunity to pay less tax may sound tempting, but the consequences could be devasting.
Unfortunately, there are hundreds of unethical companies preying on UK-based contractors and freelancers. These businesses are promising their clients the chance to keep more of their money and to pay less tax. However, while it may sound tempting, engaging with a tax avoidance scheme could land you in serious trouble with HMRC.
The Loan Charge (2019) is a piece of legislation that the government introduced, which allows them to claim underpaid tax retrospectively. The legislation has come under heavy scrutiny because even contractors who were misled and underpaid tax by mistake can be asked to pay back thousands of pounds – immediately. Under the Loan Charge (2019), HMRC can retrospectively punish people and reclaim underpaid tax from as far back as 20 years ago. Therefore, if you choose to underpay tax now, you could be punished and face a huge tax bill in 2040. Tax avoidance is something that you should never consider.
Please keep reading and find out how to spot a tax avoidance scheme. There are plenty out there – don’t be fooled into using one.