Four UK firms have been added to the HMRC’s list of named tax avoidance schemes, promoters, enablers and suppliers. The most recent update to the list was on 11 April 2024 with the addition of Acacia Management Services Limited, Alphasaint Limited, Ultra Employment Limited and Worx 4U Limited.

Acacia Management Services AMS) is involved in human resources provision and management of human resources functions. According to the HMRC, scheme users enter into a contract of employment and an option grant agreement with AMS. AMS invoice recruitment agencies for the services provided by the scheme users.

On receipt of payment from the recruitment agencies, AMS pays a National Minimum Wage or National Living Wage salary to the scheme users with tax and National Insurance Contributions (NICs) deducted. AMS also makes a second payment to scheme users, described as an ‘option grant’, with no tax or NICs deducted.

HMRC’s view is that the option grant payments are no different to normal income, and tax and NIC’s are payable. HMRC advise employees of AMS to familiarise themselves with the guidance and to satisfy themselves that the correct amount of tax is being deducted on their income. HMRC added that it has evidence that AMS predominantly worked with recruitment agencies in the medical sector.

Alphasaint Limited (ASL) describes itself as an employment placement agency. The scheme users’ total wages for their contracts with ASL is artificially separated into two elements. The first element is a salary with Income Tax (IT) and National Insurance Contributions (NICs) deducted. The second element is paid without deduction of IT and NICs by ASL and it is claimed to not count as employment income.

HMRC’s view is that both elements of the payment should be treated as ‘normal income / as the users’ salary’ and is therefore subject to IT and NICs.

Meanwhile, scheme users from Ultra Employment (UEL) enter an employment contract with UEL and receive their pay by one of three payment methods, all of which mean tax and National Insurance contributions (NICs) are only paid on part of the entire pay for the user’s services.

The first method is a single aggregated payment from UEL, made up of two elements, a salary with tax and NICs deducted, and another without deductions. The second method involves two separate payments to the scheme user from UEL, a salary with tax and NICs deducted, and another made without deductions.

The third method is a salary paid by UEL, with the other payment made by a third party. UEL purport that the untaxed amounts are for either a share growth in an Isle of Man cell company, or other means that they maintain is not related to employment income. A protected cell company (PCC) is a legal entity that consists of a core linked to several cells. Cells in a PCC have separate assets and liabilities and are independent of one another. A PCC is governed by a single board of directors that oversees the entire legal entity.

As for the details on how Work4U Limited, which is involved in human resources provision and management of human resources functions, a company enters into a contract with ‘ContractingWorks’, the trading name of Worx 4U Limited (W4U), to provide consultancy services. 

W4U signs an agreement with the individual director of the company to undertake the consultancy services to W4U. W4U pay the individuals a flat fee per day exclusive of VAT. On the last working day of each week, the individual submits an invoice to W4U for their services. The individual then signs an advance deed, described as the ‘Self Employed Advance Deed’.

This provides an initial advance against their future earnings or bonus payments of no more than £5,000 and, from time to time, such further advance payments as the company think fit. It is claimed that ‘Any advance payments shall be repayable’, but HMRC hold no evidence that these advance payments have ever repaid. W4U make the ‘advance’ payments to the individual, but without deductions for Income Tax or National Insurance contributions.