There has been an increase in HMRC issuing letters titled ‘Publishing information about you’ to agencies. It is vitally important that representations are made within the deadline set, usually 30 days of the date of the letter. Failure to do so will result in HMRC deciding, without evidence to the contrary, to publicly publish information about tax avoidance schemes and their suspected promoters and enablers. If you receive a HMRC communication, immediately seek experienced professional advice.
Deep dive
Having been identified as an area of significant tax non-compliance, HMRC have recently dedicated significant resource to educate and challenge tax avoidance by umbrella companies.
HMRC’s ‘don’t get caught out’ campaign, focuses on creating awareness of tax avoidance schemes that exist specifically within industries which rely on contractors and agency workers, where PAYE and staffing matters are outsourced to umbrella companies.
As part of the campaign, HMRC have issued Spotlight publications, which highlight and explain specific types of tax avoidance, in order to help those who may be affected identify and steer clear of any involvement. HMRC’s Spotlight 60 which was titled ‘warning for agency workers and contractors employed by umbrella companies’, specifically detailing disguised remuneration schemes involving loans. Spotlight 71 details avoidance schemes which move workers between different umbrella companies in order to disguise the avoidance, and sets out warning signs.
In addition to the publicity, HMRC has been robustly tackling tax avoidance in this area. Firstly, new legislation will take effect from April 2026, making umbrella companies and other parties in the worker supply chain jointly and severally liable for unpaid PAYE and NIC liabilities. It is important to note that in circumstances where there is no agency involved in the supply-chain, ultimately it will be the end user who is liable.
Secondly, there is the introduction of the concept of a “purported umbrella company”, which is a new legal concept designed to tackle non-compliant umbrella companies that are presenting as compliant whilst deliberately avoid their employment tax obligations. You can read more about the changes in our article here.
Finally, HMRC’s efforts in tackling tax avoidance remain robust, with significant legislative backing to challenge and penalise promoters of tax avoidance in order to stop and disrupt their operations. This was most recently illustrated in the case of HMRC v Moir Management Services Ltd (TC09681) where the First Tier Tribunal upheld HMRC’s decision to charge total penalties under DOTAS legislation of almost £1.6m.
We have seen HMRC’s compliance approach evolving; in addition to the umbrella companies operating the PAYE and the individual employees, often caught in the crossfire of any tax avoidance are recruitment agencies who act as middleman between the candidate and umbrella company.
Specifically, we have seen an increase in HMRC issuing letters titled ‘Publishing information about you’ to agencies. The implication of such a letter is that HMRC are intending to publish information about the company in connection with the promotion or enabling of tax avoidance on their publicly available list. This is clearly an outcome that a company which has built up a stellar reputation in a highly competitive industry will wish to avoid, especially when any tax avoidance has usually taken place without their knowledge.
Thankfully this is an outcome which can be avoided for those who do not fall within the legislation, however it requires prompt action in response to the receipt of the aforementioned letter from HMRC. HMRC has the power to publish information about tax avoidance schemes and their suspected promoters and enablers under Section 86 of the Finance Act 2022. However, HMRC must notify the agency impacted and allow 30 days for the agency to make representations regarding whether the information HMRC hold should be published.
It is therefore vitally important that a response is made with representations within this time frame, as failure to do so will result in HMRC deciding, without evidence to the contrary, to include the agency on the published list of entities identified as engaging or assisting in tax avoidance.
We understand that once representations are submitted, they are reviewed internally by a HMRC inspector whose decision is then reviewed and approved by a secondary authorising officer, who ultimately holds the decision-making powers on whether it is appropriate for HMRC to for the information to be published under section 86.
Given the time pressure and the huge risks involved, we strongly recommend seeking experienced professional advice immediately upon receipt of such a letter to obtain support in drafting suitable representations.
At HaysMac we have a proven track record in submitting representations to HMRC which have been successful in securing HMRC’s agreement not to publish our client’s details by addressing both the factual and legal basis of the proposed publication together with providing suitable evidence for consideration.
If you have received a notification or if you are linked to an umbrella company whose information has been recently published by HMRC please contact Danielle Ford, Partner, Tax Disputes and Resolutions.
