Following last week’s announcement about HMRC’s plans to impose £1m fines on promoters of tax avoidance schemes and revelations about the Liberty tax strategy, the PCG has issued a warning to all independent professionals in the UK’s contracting community to steer clear of such tax planning schemes.
A secret database leaked to the Times last week revealed that a number of high-profile celebrities, NHS doctors, legal professionals, businessmen, party donors, a judge and even criminals had participated in the £1.2bn Liberty tax strategy – the largest tax avoidance scheme yet marketed. The legality of the scheme will be challenged in court next March by HMRC.
Umbrella Company Employees, who pay their due tax and NICs automatically on a PAYE basis via their umbrella services, are most unlikely to have participated in such schemes; however, others in the UK’s contracting community may wish to heed the PCG’s advice. Its chief executive, Chris Bryce, cautioned freelancers seeking to reduce their tax burden to “think twice” before investing in one of these schemes.
Claiming that the investment was made on the advice of an accountant or finance professional is “clearly no longer an excuse”, Mr Bryce said, adding: “HMRC is clamping down on anything it deems to contravene the rules and the risk is now far outweighing any potential gains that could be made.”
He continued: “With this is mind, PCG is advising self-employed people to steer clear of schemes such as the one. If you are uncertain about any aspect of your finances or feel you might be at risk, get in touch with PCG.”