Tax avoidance: don’t get caught out

Tax avoidance is when people bend the rules of the tax system to try to pay less than they owe. HMRC’s report, the Use of Marketed Tax Avoidance schemes in the UK, has shown that contractors are often targeted and drawn into schemes marketed by companies promising higher take home pay and less administration. Many of these schemes do not work and there could be significant financial implications for anyone involved. Use the risk checker to check whether your current contract could involve tax avoidance.

Contractors who use tax avoidance schemes end up having to pay back the tax they should have paid in the first place – with interest and potentially a penalty. That is on top of the fees they have already paid for joining the scheme. This is because each of us is responsible under UK law for paying the correct amount of tax. This still applies if contractors have appointed someone else to deal with their tax affairs or been given bad advice – the ultimate responsibility and risk rests with the individual.