A Liverpool-based contracting firm accused of promoting tax avoidance is to be wound up after appointing liquidators, City A.M. has learned.
The company, Umbrella Union, marketed itself as an “umbrella contracting company” that aimed to help individuals “comply with financial regulations while remaining self-employed.”
In October last year, HM Revenue & Customs (HMRC) added the business to its official list of “promoters” of tax avoidance schemes.
According to HMRC’s review, employees of Umbrella Union were paid in two parts: one element as a salary – typically at or just above the minimum wage – subject to income tax and National Insurance contributions (NICs), and a second element that was not taxed or subjected to NICs.
HMRC stated both components of the pay should be classed as “normal income” or salary, and therefore taxable. Guidance was issued by HMRC around what it described as “disguised remuneration schemes” used by agency workers and contractors employed through umbrella companies.
The department also noted that some umbrella firms may run multiple schemes simultaneously – one compliant with tax legislation, and another that attempts to sidestep it. HMRC has urged individuals employed by Umbrella Union to review the guidance and ensure that the correct level of tax has been withheld from their earnings. It added: “If you’re using this scheme, get in touch for help to exit.”
A Companies House notice filed on Friday confirmed that Umbrella Union had appointed liquidators Antony Batty & Company LLP on Tuesday. The business has not responded to requests for comment.
The broader issue of tax avoidance and evasion continues to draw attention. HMRC estimates that tax evasion cost the UK £5.5bn in the 2022–23 financial year. A growing proportion of that shortfall stems from small businesses – rising to 81 per cent of the estimated loss, up from 66 per cent in 2019–20.
A report by a House of Commons committee, published in February, expressed concern that HMRC “is not sufficiently curious about the true scale of tax evasion.”
