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HMRC pledges crackdown on tax avoidance scheme

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HM Revenue & Customs (HMRC) has pledged to clamp down on those who use and promote a 'highly aggressive' tax avoidance scheme.

The tax avoidance scheme exploits current employment allowance rules, and could lose HMRC up to £20m this year.

The allowance was introduced last year, and means companies can claim £2,000 off their annual employers’ National Insurance bill. The measure was introduced to encourage businesses to hire more staff.

The HMRC pledge follows an undercover BBC investigation, in which Anderson Group sales manager Ian Moran was covertly recorded promoting the scheme to clients. Moran suggested that a company with around 200 employees set up over 100 limited companies, spreading their staff across each of them. The limited companies could then all claim the £2,000 allowance. As a result, Moran promised that the company’s National Insurance liabilities would fall from £300,000 a year to zero.

Moran went on to suggest that around 10,000 workers across the country were already enrolled in the scheme via similar circumstances.

However, HMRC head of compliance Jennie Granger rubbished Moran’s claims, and said anyone found to be promoting such an arrangement would be prosecuted.

“A scheme like this wouldn’t work, and anyone thinking of trying to exploit the allowance in this way should think again. Failing to disclose an attempted avoidance scheme is punishable by a fine of up to £1m,” Granger said.

Responding to the news, Robin Williamson, head of the low income tax reform group at the Chartered Institute of Taxation, dubbed the scheme “both highly aggressive, and abusive.”

“They really are having a laugh.”

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