Corporate report

List of tax avoidance schemes subject to a stop notice

Updated 18 April 2024

This is a list of tax avoidance schemes that are subject to a stop notice. HMRC issues stop notices to promotors of tax avoidance schemes, requiring them to stop selling or promoting the scheme. There’s more information about stop notices below.

Under the Promoters of Tax Avoidance Schemes (POTAS) regime, HMRC can publish information about promoters of tax avoidance schemes that are subject to a stop notice, and details of the scheme specified in the notice.

The POTAS rules apply to promoters of tax avoidance schemes. These rules aim to deter the development and marketing of avoidance schemes.

HMRC can publish details of the arrangements included in the stop notice once the notice has been sent. However, the promoter or other persons subject to a stop notice can appeal, and HMRC cannot publish the name of the promoter or other persons subject to a stop notice before the appeal period has ended.

Read more information about appeal periods.

1. Current list of tax avoidance schemes subject to a stop notice

The list is presented in date order and will be updated regularly.

The most recent update was on 18 April 2024 with updates to the entries for stop notice 4 and stop notice 5 and the additions of stop notice 21, stop notice 22 and stop notice 23.

This is not a complete list of all tax avoidance schemes currently being marketed. If a tax avoidance scheme is not shown in the list, this does not mean that the scheme works or is in any way approved by HMRC.

Stop notice 1

• Date of publication: 2 March 2023
• Date stop notice issued: 19 December 2022

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. A contractor requires an umbrella company in order to enter a contract with an end client to provide their services and receive payments. In these arrangements the umbrella company is registered offshore (company A).

2. The contractor enters into an Employment Agreement with company A.

3. A UK company (company B) provides onshore support to the offshore umbrella company to facilitate the engaging of end clients and recruitment agencies.

4. The employee then undertakes work for the end client and submits timesheets either directly to company B or their agency who pass on the details to the company B. Company B invoice the end client for the work done and receive payment from the end client. The invoices sent to the end client reflect the agreed contract value for services of the contractor.

5. The contractor then receives a salary payment based on the National Minimum Wage rate which is made through the payroll and a second payment, an ‘advance’ which is not made through the payroll and not declared for tax and NIC. This payment was described to an employee as ‘an advance on a discretionary bonus which we have not yet determined, and is therefore non-taxable’.

Stop notice 2

• Name of promoter of scheme: Saxonside Limited
• Date of publication: 2 March 2023
• Last updated: 7 June 2023
• Date stop notice issued: 13 December 2022

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Scheme Users enter into an employment contract (‘the Employment Contract’) with Saxonside Limited. The Employment Contract stipulates that the employee will work on client assignments and in so doing will become an employee of Saxonside Limited. In relation to payment, it states that Saxonside Limited will pay the employee (ie, the Scheme User) at least the National Minimum Wage (NMW).

2. At the same time, Scheme Users enter into an agreement to grant an option (‘the Option Grant Agreement’) with Saxonside Limited. This is the preliminary agreement under which Scheme Users (called ‘the Grantor’ in the agreement) undertake to grant an option which, if exercised, requires the Grantor to enter into an annuity agreement in which Saxonside Limited (‘the Grantee’) is the annuitant and the Grantor is the obligor. The Grantor is not permitted to assign any rights or obligations under the agreement without Saxonside Limited’s consent. On the other hand, Saxonside Limited has full discretion to assign all or part of its rights under the Option Grant Agreement without the consent of the Grantor. The Grantor would become required to grant the option only after receiving a ‘further consideration’ of £1000 from Saxonside Limited. As the Grantee, Saxonside Limited agrees to make payments to the Grantor as consideration for receipt of the grant. These payments are claimed to be capital payments as a result of this agreement and are not made subject to deductions of tax or NIC.

3. The annuity agreement (‘the Annuity Agreement’) users will enter into with Saxonside Limited is contained within schedule 2 of the Option Grant Agreement. The Annuity Agreement records the terms of the deferred private annuity contract, which is the subject of the Option Grant Agreement, as agreed between the parties. The Annuity Agreement records that the yearly calculation for payments will be determined by the formula set out in the agreement. The agreement stipulates that ‘such payments will commence on the first day of January 2035 and will continue to be paid annually on this date for the life of the obligor’.

4. Saxonside Limited invoices the recruitment agency or end client for the services carried out by the Scheme Users based on the hours worked and the appropriate hourly rate.

5. Saxonside Limited receives the funds for the services carried out by Scheme Users from the recruitment agencies or end clients.

6. The amount that each Scheme User is entitled to be paid is confirmed in the Employment Contract as being in line with the NMW. This is paid by Saxonside Limited in line with the NMW hourly rate. This is confirmed by the payslips and the bank statements of Scheme Users.

7. Saxonside Limited withholds and retains a percentage, being approximately 20% of the amount invoiced to the recruitment agency or end client for the services carried out by Scheme Users (‘the gross contract value’). It then pays the balance, after the payment of NMW, as payment for the grant of an option to Scheme Users (see 8 below). This balance is confirmed in a notification issued by Saxonside Limited to Scheme Users (the ‘Option Grant Note’).

8. Saxonside Limited makes a second payment to Scheme Users called the ‘Grantee’s Payment’, as referred to in the Option Grant Agreement and Annuity Agreement. These are evidenced in the Option Grant Notes as well as the Scheme Users’ bank statements which show an aggregate total in accordance with the net salary per the payroll and the second payment noted on the Option Grant Note from Saxonside Limited the same day. These are paid in one aggregate payment. The second element of the payment is made without deductions of tax and NICs.

9. The Grantee payments that Saxonside Limited makes to Scheme Users are claimed not to be subject to income tax or National Insurance contributions.

Stop notice 3

• Date of publication: 2 March 2023
• Date stop notice issued: 6 December 2022

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The user enters into a Contract of Employment with Company X which provides that the employee will be paid for time worked at the National Minimum Wage (NMW) rate or, if applicable, the National Living Wage (NLW) rate unless otherwise specified in the Employee Assignment Schedule. At the same time the user also enters into a Loan Agreement.

2. The loan amount is unspecified. Company X (lender) promises to loan certain monies to the borrower (ie, the scheme user) and the borrower promises to repay the principal amount to the lender plus 2% interest above the official HMRC rate. The loan is said to be repayable within 60 days on written demand from the lender and is secured against ‘any achieved bonus payments’

3. Users also enter into a ‘Bonus, Incentive or Pay Scheme Offer’ agreement with Company X. The offer invites the user to participate in a bonus scheme where Company X will pay a bonus in the event of the user generating in excess of 170% of their employment cost The bonus paid will be between 100% and 170% of the total employment cost attributable to the user. Company X enters into a contract with end client directly or via an agency. The employee then undertakes work for the end client/agency and submits timesheets either directly to Company X or their agency who pass on the details to Company X.

4. Company X invoices the end client for work done, then receives payment for services from the end user or agency.

5. Company X issues a payslip to the user and deduct a management fee of 15% from the gross amount received from the end client as shown in the ‘Company Deductions’ section of the payslip.

6. Company X pay NMW and holiday pay at an hourly rate as outlined in the Contract of Employment. National Insurance contributions (NICs) and PAYE are deducted from the NMW/NLW and holiday earnings.

7. Company X pay the remaining balance in the form of loan, the terms of which secure repayment against any future bonus or incentive payments arising from the ‘Bonus, Incentive or Pay Scheme Offer’ Agreement users enter into with Company X. No tax or NICs are paid on the loan.

Stop notice 4

• Name of promoter of scheme: PAYEme Ltd
• Date of publication: 2 March 2023
• Last updated: 18 April 2024
• Date stop notice issued: 1 November 2022

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Users of the arrangements (‘Scheme Users’) enter into a Contract of employment (‘the Contract of Employment’) with PAYEme Ltd. The Contract of Employment provides that the employee will be paid for time worked at the ‘pay rate’ which is defined as ‘a sum per hour equivalent to the minimum allowed by National Minimum Wage Act 1998 (NMW) and a commission in accordance with the Commission Plan shown at Schedule 1. The Contract of Employment also states that PAYEme Ltd does not provide any work finding services (clause 2.4).

2. Scheme Users enter into an Advance Agreement (‘the Master Advance Agreement’) with PAYEme Ltd in its capacity as the sole trustee of a settlement (‘the Settlement’) known as the PAYEme Ltd Settlement between (1) the settlor and (2) the Employer as original trustee. The Master Advance Agreement provides that PAYEme Ltd will make an initial advance and further advances to the Scheme User. Each advance is repayable on the ‘thirtieth anniversary of it being made’ and is interest free until due for repayment.

3. Scheme Users undertake work for an end client and submit timesheets either directly to PAYEme Ltd or their agency who pass on the details to PAYEme Ltd.

4. PAYEme Ltd invoices the end client for the work done and receives payment from the end client. The invoices sent reflect the agreed contract value for services of the Scheme User.

5. PAYEme Ltd withholds and retains a percentage amount of around 18% of the amount invoiced to the agency or end client for the services carried out by the Scheme User and pays the balance remaining to the Scheme User in 2 ways: a salary payment based on NMW through the payroll, and the ‘advance’, which is not made through the payroll and not subjected to income tax and National Insurance contributions.

Stop notice 5

• Name of promoter of scheme: Contractorcare Ltd
• Date of publication: 2 March 2023
• Last update:18 April 2024
• Date stop notice issued: 23 August 2022

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Users of the arrangements (‘Scheme Users’) enter into a contract of employment (‘the Contract of Employment’) with Contractorcare Ltd. The Contract of Employment provides that the employee will be paid for time worked at the ‘pay rate’ which is defined as ‘a sum per hour equivalent to the minimum allowed by National Minimum Wage Act 1998 (NMWA) and a commission in accordance with the Commission Plan shown at Schedule 1’. The Contract of Employment also states that Contractorcare Ltd does not provide any work finding services (clause 2.4).

2. Scheme Users enter into an Advance Agreement (‘the Master Advance Agreement’) with Contractorcare Ltd in its capacity as the sole trustee of a settlement (‘the Settlement’) known as the Contractorcare Ltd Settlement between (1) the settlor and (2) the Employer as original trustee. The Master Advance Agreement provides that Contractorcare Ltd will make an initial advance and further advances to the Scheme User. Each advance is repayable on the ‘thirtieth anniversary of it being made’ and is interest free until due for repayment.

3. Scheme Users undertake work for an end client and submit timesheets either directly to Contractorcare Ltd, or their agency who pass on the details to Contractorcare Ltd.

4. Contractorcare Ltd invoices the end client for the work done and receives payment from the end client. The invoices sent reflect the agreed contract value for services of the Scheme User.

5. Contractorcare Ltd withholds and retains a percentage amount of around 17% of the amount invoiced to the agency or end client for the services carried out by the Scheme User and pays the balance remaining to the Scheme User in 2 ways:

• a salary payment based on minimum rates allowed under the NMWA through the payroll
• the ‘advance’ which is not made through the payroll and not subjected to tax and National Insurance contributions

Stop notice 6

• Name of promoter of scheme: Focus Contractor Limited
• Date of publication: 13 April 2023
• Second update: 7 June 2023
• Last updated: 12 October 2023
• Date initial stop notice issued: 13 February 2023
• Date latest stop notice issued: 6 June 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Scheme Users enter into an employment contract (‘the Employment Contract’) with Focus Contractor Limited. The Employment Contract stipulates that the employee will work on client assignments. In relation to payment, it states that Focus Contractor Limited will pay the employee (ie the Scheme User) the applicable National Minimum Wage or, if applicable, the National Living Wage (NMW).

2. At the same time, or shortly afterwards, Scheme Users are issued a share in the Isle of Man protected cell company, Company Y. The share is in a cell that is specific to the Scheme User.

3. Focus Contractor Limited invoices the recruitment agency or end client for the services carried out by the Scheme Users based on the hours worked and the appropriate hourly rate.

4. Focus Contractor Limited receives the funds for the services carried out by Scheme Users from the recruitment agencies or end clients.

5. The amount that each Scheme User is entitled to be paid is confirmed in the Employment Contract as being in line with the NMW. Focus Contractor Limited makes a payment to the Scheme User in line with, or slightly above, the NMW hourly rate. This is confirmed by the payslips and the bank statements of Scheme Users.

6. A secondary, nontaxed payment is made to the Scheme Users. The secondary payments are said to be made in connection with an increase in the value of the share in the unique cell in Company Y that is specific to the Scheme User. No PAYE Income Tax is deducted and accounted for in respect of the payment, nor are any National Insurance Contributions deducted and accounted for in respect of the payments.

7. An amount of approximately 10% is said to be retained in an escrow account, purportedly to cover the Scheme Users’ future Capital Gains Tax liabilities.

Stop notice 7

• Name of promoter of scheme: Purple Pay Limited (PPL)
• Address of promoter: 70 Gracechurch Street, London, EC3V 0HR
• Date of publication: 13 April 2023
• Date stop notice issued: 6 January 2023
• Last updated: 7 December 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

PPL invoice and receive payment from the end user.

PPL pay the user around 5% of this amount as wages which is taxed under Pay As You Earn (PAYE).

PPL pay around 75% of this amount as an advance to the user under the employee cash flow facility. This amount is not taxed under PAYE.

PPL retain around 20% of the invoiced amount as their fee.

1. The user enters into a contract of employment with PPL. This contract provides that the users wages will be at the applicable National Minimum Wage (or, if applicable, the National Living Wage) rate, unless the employee assignment schedule states otherwise.

2. The user enters into a second agreement called the Employee cash flow facility. This is essentially a loan between the user and PPL and allows PPL to provide unsecured advances to the user.

3. PPL enter into a contract for services with end users.

4. The user enters into a Co-ownership (Co-op) agreement with PPL and the trustee of the Purple Pay employee share ownership trust. As part of this agreement, the user is said to acquire a joint interest in shares of PPL.

5. PPL pay the user wages at the National Minimum Wage or National Living Wage. This payment is taxed under PAYE.

6. PPL pay advances to the user as per the employee cash flow facility. These payments are not taxed under PAYE.

7. The user disposes of their joint interest in shares acquired under the Co-ownership (Co-op) agreement and any dividend, distribution or proceeds of sale in relation to this joint interest is said to pay off the advance payments the user received from PPL (as written into the terms of the Co-ownership (Co-Op) agreement and employee cash flow facility).

Stop notice 8

• Date of publication: 13 April 2023
• Date stop notice issued: 28 March 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The user enters into a contract of employment with Company X. This contract provides that the users wages will be at the applicable National Minimum Wage (or, if applicable, the National Living Wage) rate, unless the employee assignment schedule states otherwise.

2. The user enters into a second agreement called the employee cash flow facility. This is essentially a loan between the user and Company X and allows Company X to provide unsecured advances to the user.

3. Company X enter into a contract for services with end users.

4. The user enters into a Co-ownership (Co-op) agreement with Company X and the trustee of the Company X employee share ownership trust.

5. Company X pay the user wages at the National Minimum Wage or National Living Wage. This payment is taxed under PAYE.

6. Company X pay advances to the user as per the employee cash flow facility. These payments are not taxed under PAYE.

Stop notice 9

• Date of publication: 13 April 2023
• Date stop notice issued: 24 January 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Scheme Users enter into contracts of employment with Company X. The contract stipulates at clause 3.1.1, that the contractor will receive National Minimum Wage (NMW) or National Living Wage (NLW) if applicable.

2. Scheme Users also enter into an Option Agreement with Company X. In the agreement, Company X agree to pay the Scheme User and in return they grant Company X the right to oblige Company X and them to enter into an annuity agreement. Entering into the annuity contract is conditional upon various criteria being met.

3. Company X then enter into contracts for services with end clients or agencies for the provision of the Scheme Users’ services.

4. End clients/Agencies pay Company X for the provision of the Scheme Users’ services based on timesheets completed.

5. In line with the contract of employment, the Scheme Users are paid NMW/NLW. The amounts are calculated based on hours worked per timesheets. Evidence obtained confirm payments appear to be made from Company X to the Scheme Users, but the amounts paid exceed the NMW/NLW pay shown on the payslips.

6. HMRC understand that the additional amount paid is said to be payments under the Option Agreement. The amounts are said to be investments and are therefore not subject to PAYE despite the overall amount being a relative percentage of the Scheme User’s gross contract value.

Stop notice 10

• Date of publication: 13 April 2023
• Date stop notice issued: 24 March 2023
• Last updated: 27 July 2023
• Date stop notice ceased to have effect: 11 June 2023

Stop notice ceased to have effect

1. The users enter into an employment contract (‘the Employment Contract’) with Company X. The Employment Contract stipulates that the employee will work on client assignments and in so doing will be become an employee of Company X. In relation to payment rate, it states that Company X will pay the employee at least the National Minimum Wage (NMW) pay rate together with any commission to be paid under the ‘Commission Plan’ (section 9 (a) (i)).  It states that the Commission Plan cannot be altered retrospectively, and no payment can be made in excess of the pay rate unless it is in accordance with this commission plan which is available on request. There is no mention in the Employment Contract that the employee will receive loans or advances.

2. Once the users are employees of Company X, they are then required to forward timesheets to Company X after completing their work for the relevant period. The users obtain a timesheet from the agency or end user and forward this to Company X. Company X then invoice the recruitment agency or end user for the services carried out by the users. Once Company X receive the funds for the services carried out, they then process the next step of the arrangements.

3. Company X withholds and retains a percentage amount, being between 15% and 20% of the amount invoiced to the recruitment agency or end user for the services carried out by the users (‘the gross contract value’) and pays the balance remaining to the users (as two separate payments).

4. The amount that each of the users are entitled to be paid is confirmed in the Employment Contract as being in line with the NMW. This is paid by Company X in line with the NMW hourly rate.

5. Company X also makes a secondary payment to the employee which is deemed to be an informal loan or advance. These are evidenced in the bank statements of the users which show an amount from Company X noted as salary in accordance with the net salary per the payroll and a second payment noted as pay from Company X the same day. This secondary payment is made without deductions of tax and NICs.

Stop notice 11

• Name of promoter of scheme: Peak PAYE Ltd
• Date of publication: 13 April 2023
• Last updated: 7 June 2023
• Date stop notice issued: 17 November 2022

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The users enter into an employment contract (‘the Employment Contract’) with Peak PAYE Ltd. The Employment Contract stipulates that the employee will work on client assignments and in so doing will become an employee of Peak PAYE Ltd. In relation to payment, it states that Peak PAYE Ltd will pay the employee at least the National Minimum Wage (NMW), or National Living Wage where appropriate.

2. At the same time, the users enter into an Agreement to Grant an Option (‘the Option Grant Agreement’) with Peak PAYE Ltd. This is the preliminary agreement under which the users (called ‘the Grantor’ in the agreement) undertake to grant an option which, if exercised, requires the Grantor to enter into an annuity agreement in which the ‘Grantee’, Peak PAYE Ltd, is the annuitant and the Grantor is the obligor. The users are not permitted to assign any rights or obligations under the agreement without Peak PAYE Ltd’s consent. On the other hand, Peak PAYE Ltd has full discretion to assign all or part of its rights under the Agreement without the consent of the users. The users would become required to grant the option only after receiving a ‘further consideration’ of £1000 from Peak PAYE Ltd. As the Grantee, Peak PAYE Ltd agrees to make payments to the user as consideration for receipt of the grant. These payments are claimed to be capital payments as a result of this agreement and are not made subject to deductions of tax or National Insurance Contributions (NICs).

3. The users also agree to enter into an annuity agreement (‘the Annuity Agreement’) with Peak PAYE Ltd. The wording of the Annuity Agreement is attached to the Option Grant Agreement at Schedule 2. The Annuity Agreement records the terms of the deferred private annuity contract, which is the subject of the Option Grant Agreement, as agreed between the parties. The Annuity Agreement records that the yearly calculation for payments will be determined by the formula set out in the agreement. The agreement stipulates that ‘such payments will commence on the first day of January 2035 and will continue to be paid annually on this date for the life of the obligor’. The requirement to enter into the Annuity Agreement is triggered by Peak PAYE Ltd exercising the option under the terms of the Option Grant Agreement. In summary, Peak PAYE Ltd makes payments to the user and then at a later date can pay £1,000 to exercise the option, triggering a requirement for the user to make payments to Peak PAYE Ltd under an annuity which are based on the sum of the payments made by Peak PAYE Ltd to the user.

4. Once the users are employees of Peak PAYE Ltd, they are then required to forward timesheets to Peak PAYE Ltd using a portal for this purpose. The next stage in the operation of arrangements is that the users obtain a timesheet from the agency or end user and forward this to Peak PAYE Ltd. Peak PAYE Ltd then invoices the recruitment agency or end user for the services carried out by the users based on the hours worked and the appropriate hourly rate. Once Peak PAYE Ltd receives the funds for the services carried out, they then process the next step of the arrangements.

5. The amount that each of the users is entitled to be paid is confirmed in the Employment Contract as being in line with the NMW. This is paid by Peak PAYE Ltd in line with the NMW hourly rate. This is confirmed by the payslips and the bank statements of the recipients.

6. Peak PAYE Ltd withholds and retains a percentage amount, being between 15% and 20% of the amount invoiced to the recruitment agency or end user for the services carried out by the users (‘the gross contract value’) and pays the balance, after the payment of NMW, as payment for the grant of an option to the user (see 7 below). This balance is confirmed in the Option Grant note.

7. Peak PAYE Ltd makes the secondary payment called the ‘Grantee’s Payments’, as referred to in the Option Grant Agreement and in the Annuity Agreement. These are evidenced in the Option Grantee notifications issued by Peak PAYE Ltd to the users as well as the users’ bank statements, which show an aggregate total in accordance with the net salary per the payroll and the second payment, noted on the Option Grant Note as from Peak PAYE Ltd, the same day. These are paid in one aggregate payment. This secondary element of the payment is made without deductions of tax and NICs. The Grantee’s Payments that Peak PAYE Ltd makes to the users are claimed not to be subject to income tax or NICs.

Stop notice 12

• Name of promoter of scheme: PAYE Services Ltd (PSL)
• Date of publication: 27 July 2023
• Last updated: 10 November 2023
• Date stop notice issued: 4 July 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Scheme users sign a Contract for Employment and a Master Advance Agreement with PSL. The Contract for Employment says the scheme user will be paid the National Living wage (NLW) for their services which are provided to 3rd party end clients. The Master Advance Agreement provides that PSL will make advances to the scheme user in its capacity as sole trustee of a settlement known as the ‘PAYE Services Settlement’.

2. Scheme users provide their services to the end client who makes payment for the work done. PSL then pay the scheme user a single payment which is comprised of two elements, the first is a salary at the NLW rate for the hours worked and the second is the advance. Both elements are shown as ‘income’ on the payslip provided by PSL to the user. However, only the salary element is paid after deductions of income tax and National insurance contributions (NICs), whereas the advance element is paid without deductions of income tax and NICs.

Stop notice 13

• Date of publication: 10 November 2023
• Date stop notice issued: 15 September 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The scheme user enters an employment contract with Company X who make composite payments to the scheme users for services provided by the user. The first element is a National Minimum Wage (NMW) / National Living Wage (NLW) salary that is subjected to tax and National Insurance Contributions (NICs), and a secondary element described as an ‘advance drawn down’ which is not. 

2. The arrangements can be broken down into the following steps:

• the users enter into an employment contract (‘the Employment Contract’) with Company X. The Employment Contract stipulates that the employee will provide services to clients and end users that the company may reasonably require. In relation to the employee’s payment, Paragraph 6 states that the salary will be in line with the Pay Rate which is identified at the at page 3 of the contract. The Pay Rate is defined as ‘A sum per hour equivalent to the national minimum wage or living wage (as applicable) legally in force from time to time’

• the users sign an advance deed entitling them to receive advances to be paid at the employer’s discretion

• at the same or similar time, the user assigns their contract to Company X who enter a contract with the end client/agency to provide services – usually of a specific person, the contractor they have employed

• users provide timesheets for work undertaken for end clients, these are either direct to Company X (via a portal) or possibly via the agency

• Company X invoices the end client/agency who pay the full amount to Company X

• Company X pay weekly NMW/NLW salary to users through the payroll and issue payslips. These detail the hours worked and show the rate of the NLW (which was £9.50 per hour in 2022 to 2023 and £10.42 per hour in 2023 to 2024)

• Company X issue pay statements as well as the payslips and these show the actual hourly rate charged to the agency

• Company X pays the secondary payment at the same time as the payment of the net salary and issues advance advice notes which show the advance drawn down amounts. The payments are paid as one aggregate payment

• Company X withholds and retains an amount of the figure invoiced to the end client/recruitment agency for the services carried out by the users ‘the gross contract value’. The amount retained by Company X is effectively its fee which the users pay for participating in the arrangements

Stop notice 14

• Name of promoter of scheme: Buckingham Wealth Ltd (Incorporated in Belize)
• Address of promoter: 1 Orchid Garden Street, Belmopan, Belize
• Date of publication: 10 November 2023
• Date stop notice issued: 3 July 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. An individual or company who has used a Remuneration Trust (‘the Settlor’) declares that the original trust (the ‘original Trust’ is void ab initio.

2. The contributions made to the Original Trust (‘the Original Contributions’) are claimed to fall back to the Settlor, or a company claiming to act in a fiduciary capacity for the Original Trust (‘the Fiduciary’), who claims to hold the Original Contribution on a constructive trust.

3. The Settlor assigns or otherwise contributes the Original Contributions to a new trust (‘the New Trust’).

4. By assigning or otherwise contributing the Original Contributions to the New Trust the Settlor claims that:

• the tax deduction claimed in the accounting period of the Original Contribution can still be claimed and the accounts do not need to be restated in relation to the assignment or new contribution of the Original Contribution to the New Trust

• any amounts paid, in whatever capacity, to the Director of the settlor company or to others is not chargeable to tax

Stop notice 15

• Name of promoter of scheme: Hive Umbrella Ltd (HUL)
• Address of promoter: Adamson House, Towers Business Park, Wilmslow Road, Manchester, M20 2YY
• Date of publication: 10 November 2023
• Date stop notice issued: 24 March 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The scheme user enters into an employment contract with HUL. The contract states the user will be paid at the National Minimum Wage (NMW) and may be entitled to ‘Ad hoc Pay Advances’. This ‘advance’ represents an interest free debt (to HUL) which is offset against a future bonus when HUL decide to grant it to the user, eliminating the debt. Advances are made to the user during each payroll cycle for their work, and an administration fee is charged by HUL.

2. The scheme user undertakes work for an agency/end client and submits timesheets to HUL, who invoice the agency for the work done. The scheme user then receives a single payment from HUL which consists of two elements:

• the first element is the NMW salary with tax and NICs paid
• the second element, described as ‘advance drawn down’ is not taxed

Stop notice 16

• Name of promoter of scheme: Olympus Contracting Limited (OCL)
• Address of promoter: 63-66 Hatton Garden, London, EC1N 8LE
• Date of publication: 7 December 2023
• Date stop notice issued: 7 November 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The arrangement begins with an individual (‘the User’) holding a contract, or about to start a contract, with an end client (‘the End User’) or a Recruitment Agency (the ‘Agency’). The User becomes an employee of OCL who acts as the User’s employer and provides the User’s services to the End User. 

2. OCL enters into an Employment Contract (the ‘Contract’) with the User which provides that the User will receive a salary from OCL paid at the National Minimum Wage or National Living Wage (both referred to hereafter as ‘the Salary’) plus holiday pay. The individual receives the Salary which is taxed through PAYE and a second untaxed payment (‘the Untaxed Payment’) paid into the User’s bank account as a single amount. The Contract includes the ability for OCL to offer additional ‘benefits’ to employees.

3. The Users provide services to the End Users and complete timesheets, or electronic time recording system as required by the End User. OCL invoices the End User or the Agency for the work done and receives payments. OCL pays Users the Salary, which is shown on their payslips (the ‘Payslip’), the Salary is paid after deduction of Income Tax and National Insurance Contributions (‘NIC’). At the same time OCL pays an Untaxed Payment which is not recorded on the Users’ Payslips.

4. OCL also issues a Reconciliation Statement (‘Reconciliation Statement’) which show the gross payment received by OCL from the End Users at the full hourly pay rate charged to the End User. The Reconciliation Statement also shows a lower hourly pay rate which is multiplied by the hours worked (to the maximum shown in the contract) to show the amount from which deductions are taken. The net balance represents the Salary which is then carried forward to the Payslip for the pay period on which PAYE is applied.

5. The additional Untaxed Payment is shown on a separate document called a Withdrawal Statement (‘Withdrawal Statement’). 

Stop notice 17

• Date of publication: 21 March 2024
• Date stop notice issued: 25 October 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The scheme users enter into an employment agreement with a Maltese company - Company A. The agreement states that unless otherwise specified, wages will be paid at the applicable National Minimum Wage (NMW) or National Living Wage (NLW). The employment agreement refers to potential bonus payments advising that a ‘Discretionary Profit-Sharing Bonus’ may be paid periodically if the user has, in the ‘reasonable opinion’ of Company A, generated sufficient profits to warrant the bonus (Clause 3.3 Employment Agreement).

2. At the same time, a UK company, Company B, enters into an agreement for services with the end client, or recruitment agency.

3. Company B accept assignments on behalf of the user and provide confirmation to the agency, specifying the duration of the assignment, the fees payable by the agency and such expenses as may be agreed (Clause 3.3 Agreement for Services).

4. Company B receives the funds for the services carried out by the scheme users from the recruitment agencies or end clients.

5. Company A make payment to scheme users, in their role as the employer. They issue payslips to the user showing a deduction of PAYE and employee NIC. A corresponding ‘Pay Statement’ is issued which includes an additional sum described as an ‘Umbrella Advance’. No PAYE Income Tax, nor any National Insurance contributions are deducted and accounted for in respect of the umbrella advance. Both the untaxed umbrella advance and the PAYE wages are paid to the user in a single payment, as confirmed by user bank statements.

Stop notice 18

• Date of publication: 21 March 2024
• Date stop notice issued: 20 November 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. A contractor, having already obtained work via an agency or directly with an end client, approaches Company A for it to act as an umbrella company to conduct payroll and invoicing services.

2. The contractor enters a contract of employment with Company A. This contract states that wages will be at the National Minimum Wage (NMW) or the National Living Wage (NLW) rate if applicable, and that the contractor may be considered periodically for a ‘Discretionary Profit Sharing Bonus’ provided that they have generated sufficient profits. The contract also provides that employees may receive ‘Pay Advances’ and sets out the conditions for receiving these advances and repayment terms. A ‘Pay Advance’ is described as ‘an amount advanced on account of an accrued entitlement to pay for time already worked’.

3. Company A receives the funds for the services carried out by the contractor from the agency or end user.

4. Company A then makes payments to the contractor. The contractor receives basic pay (NMW or NLW), a small ‘commission’, and holiday pay – all of which is reflected in their payslips (if issued) and subject to Income Tax and National Insurance. An additional sum, that is usually described as an ‘Advance Payment’ is also paid to the contractor. No PAYE Income Tax, nor any National Insurance contributions are deducted and accounted for in respect of the Advance Payment. Typically, Advance Payments will not be included on payslips. Both the untaxed Advance Payment and the PAYE wages are paid to the contractor in a single payment.

Stop notice 19

• Date of publication: 21 March 2024
• Date stop notice issued: 8 February 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The scheme user enters an employment contract with company X who make composite payments to the scheme users for services provided by the user. The first element is a National Minimum Wage (NMW)/Living Wage (NLW) salary that is subjected to tax and National Insurance Contributions (NICs), and a secondary element described as ‘Grantee Payments’ which is not.

2. The Users enter into an employment contract (‘the Employment Contract’) with Company X. The Employment Contract stipulates that the employee will provide services to end clients. In relation to the employee’s payment, Paragraph 3.1.2 states that the salary is defined as ‘at the national minimum wage (or if applicable, the National Living Wage) rate’.

3. The Users also sign an agreement with Company Y in which the User agrees to receive payments that grant Company Y the future option to enter an annuity agreement with the User.

4. At the same or similar time, Company X enter a contract with the end client/agency to provide services of the User.

5. It is believed that Company X invoices the end client/agency who pay the full amount to Company X.

6. Company X pay NMW/NLW salary to users through the payroll and issue payslips. These detail the hours worked and show the rate of the NLW (which was £9.50 per hour in 2022 to 2023) regardless of the hourly rate charged by Company X to the end client. The payslips often include holiday pay.

7. Company X pays the secondary payment at the same time as the payment of the net salary and provides no documentation in relation to this amount. The payments are paid as one aggregate payment.

8. Company X withholds and retains an amount of the figure invoiced to the end client/recruitment agency for the services carried out by the users. The amount retained by Company X is effectively its fee which the users pay for participating in the arrangements.

Stop notice 20

• Date of publication: 21 March 2024
• Date stop notice issued: 9 January 2024

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. A contractor having already obtained work via an agency or directly with an end client seeks an umbrella company to conduct their payroll, and therefore enters into a Contract of Employment with Company X. The contract states that wages will be at the National Minimum Wage (NMW) rate or the National Living Wage (NLW) rate if applicable. Para 3.8 onwards of the Contract of Employment explains that employees may receive ‘Ad hoc Advances’ and sets out the conditions for receiving these advances and repayment terms. A ‘pay advance’ is described as an amount accrued on account for time already worked and is specified to constitute a debt due from the employer to Company X.

2. Company X invoice the end client for the contractor’s services.

3. The payment for the services of the contractor is made by the end client/agency to Company X.

4. Company X then make a payment to the contractor. The contractor receives basic pay (the NMW or NLW rate), commission and holiday pay which is all included on the payslips and PAYE and NICs are accounted for. On the same day, the contractor will receive an Advance Advice which will include the amount of the advance received by the contractor. This amount does not get accounted for tax and NICs but is included in the single payment received by the user into their bank account.

Stop notice 21

• Date of publication: 18 April 2024
• Date stop notice issued: 3 April 2024

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. A user is engaged as an employee with Company X under a contract of employment. The contract of employment states users will be paid at the National Minimum Wage (NMW) or, if applicable, the National Living Wage (NLW)) rate and may be entitled to Ad hoc Pay Advances.

2. In addition, the user is invited into a bonus scheme.

3. The user then receives payment from Company X which consists of two elements:

• the NMW/NLW with tax and National Insurance Contributions (NIC) paid
• an ‘advance’, against future bonus payments. The ‘advance’ is not subject to tax or NIC

Stop notice 22

• Date of publication: 18 April 2024
• Date stop notice issued: 3 April 2024

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. The remuneration received by users that is attributable to the services provided by them to end clients/agencies is artificially separated by Company X into two elements.

2. One of those elements is paid as a salary that is subjected to Income Tax (IT) and National Insurance Contributions (NICs) via PAYE, the other is claimed to not count as employment income and is paid in another manner that is not subjected to IT and NICs.

3. This secondary element is paid by virtue of an option agreement, sometimes referred to as a ‘benefit in kind’ and therefore not subjected to IT and NICs.

4. It is HMRC’s view that the total remuneration received by the user is attributable to the services they provide to end clients/agencies and should therefore be subjected to income IT and NICs in its entirety.

Stop notice 23

• Name of promoter of scheme: Prime Umbrella Services Limited (PUSL)
• Date of publication: 18 April 2024
• Date stop notice issued: 25 October 2023

Details of any arrangements or proposal for arrangements promoted by the person that meet the description specified in the notice

1. Scheme Users enter into an employment contract (‘the Employment Contract’) with PUSL. The contract states that wages will be at the National Minimum Wage (NMW) rate or the National Living Wage (NLW) rate if applicable.

2. PUSL invoices the recruitment agency or end client for the services carried out by the Scheme Users based on the hours worked and the appropriate hourly rate.

3. PUSL receives the funds for the services carried out by Scheme Users from the recruitment agencies or end clients.

4. PUSL then make a payment to the scheme users. The scheme users receive basic pay (the NMW or NLW) which is on the payslips and accounted for tax and National Insurance Contributions (NICS). Also, on the same day, a secondary untaxed payment is paid to the users by PUSL and described as a ‘pass through item.

2. If you’re involved in a tax avoidance scheme

If you are involved in any of the tax avoidance schemes shown on this page and are not already talking to HMRC about your tax position, you should contact HMRC as soon as possible. There is more information about how to do this. You can also report a tax avoidance scheme to HMRC.

3. Information about stop notices

Stop notices are one of the ways in which HMRC tackle tax avoidance and those responsible for promoting it.

The main aim of issuing stop notices is to reduce the number of tax avoidance schemes that are being marketed. This makes it harder for people to get caught up in them.

When HMRC issues a stop notice to a promoter, it means:

• the promoter who receives the notice must stop selling the specified scheme
• the promoter who receives the notice must also pass a copy of it to certain associated persons, who are also subject to the stop notice and must also stop selling the specified scheme
• all those persons subject to the notice must inform HMRC of all the people they have promoted the scheme to and any they continue to promote it to
• the persons subject to the stop notice must inform all clients and intermediaries that they are subject to a stop notice, what this means, and provide them with a copy of the stop notice

If a promoter fails to comply with a stop notice they can face penalties of up to £100,000 which can increase to up to £1 million in certain circumstances.