As part of its Don’t Get Caught Out campaign, HMRC has issued £900,000 in penalties to a tax avoidance promoter whose schemes were used by many locum doctors and nurses.
Between April 2016 and April 2018, IPS Progression Limited (IPS) paid their 1,593 scheme users largely with tax-free loans – some of these workers were locum doctors and nurses who were hired via recruitment agencies to hospitals and other healthcare providers.
The tribunal judge said the hourly rate for the contractors’ services went to IPS who took a 15% cut.
The payslips issued by IPS to the workers showed that the remainder was split into three parts:
- ‘salary paid’ (this part equalled the National Minimum Wage for the hours worked)
- ‘rolled-up holiday pay’ (this was 12.07% of the ‘salary paid’ amount)
- ‘ILO bonus’ (whatever was left over from the payment)
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It was found that IPS would only deduct Income Tax and National Insurance Contributions (NICs) from all but the ‘ILO bonus’.
They claimed they ‘envisaged’ the workers would eventually repay the ‘ILO bonus’ loans which would have been subject to Income Tax and NICs.
Jonathan Smith, HMRC’s Director of Counter Avoidance, said, “This penalty underlines how IPS were prepared to ignore their legal obligations and we are pleased the tribunal agreed a significant penalty is due in this case.
“We use all powers available to ensure penalties are collected. This can include making company directors liable.
“We would urge anyone who thinks they have entered a tax avoidance scheme to contact us as soon as possible to get help.”
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