‘The past is another country, they do things differently there.’

What seemed perfectly acceptable in, say, 2011 can now give rise to problems, not least in HMRC’s interpretation of transactions.


What seemed perfectly acceptable in, say, 2011 can now give rise to problems, not least in HMRC’s interpretation of transactions.


Imagine that you were an employment agency back in the halcyon days of 5 years ago, happily supplying temporary staff to a blue-chip company to help staff an IT project. Amongst the workers was a gnarled long-term contractor who has been around the block a few times and who was contracted via another agency, but was forced to come via you, as you had an agreement with the blue-chip. This small agency seemed to be a properly established UK business and your supplier due diligence didn’t reveal anything untoward about their financial affairs. The temping lasted just over a year and all timesheets were presented on time and all payments were made in accordance with agreed terms. Everyone went about their normal business and all concerned seemed happy.

There is one party to this transaction which was, and still is, less than happy and that’s HMRC. Unknown to you, the contractor was using a tax avoidance scheme whereby in return for giving up earnings above NMW, he was being paid by way of loans, which the devisors of the scheme argued were non-taxable. By 2016 to counteract such arrangements, HMRC has armed itself with tools such as Accelerated Payment Notices (APNs) and has developed an approach to dealing with tax avoidance schemes, which may include the issue of Regulation 80 Determinations – a type of assessment on an employer or deemed employer in relation to PAYE that should have been deducted from payments made to workers in HMRC’s view.

Slowly but surely HMRC has been working its way through the multitude of tax avoidance schemes that have been notified to it since 2004 and it has now alighted upon contractor schemes, one of which was being used by that IT contractor back in 2011. HMRC, on looking at the information available, notes that the small agency went out of business a couple of years ago, but discovers that you are still in business and were part of the supply chain that passed the contractor to the blue-chip end-user. Applying the logic that’s arisen out of the intermediary reporting requirements introduced in 2015, the intermediary closest to the end-user has the obligations and, because of this and the fact that you’re last man standing, you’re it! From nowhere a Regulation 80 Determination appears in respect of a contractor you barely remember and a tax avoidance scheme of which you have no knowledge.

What to do? Firstly, within the 30 day time limit on the Determination, lodge an appeal with HMRC and request postponement of the tax demanded. Usually, HMRC  is slow at responding to appeal notices and nothing more may be heard for some while. If you wish to finalise matters it will be necessary to apply to have the appeal reviewed by HMRC. It was all so different back then…

We have had experience of clients receiving Determinations and have assisted them in handling the consequent actions. If you would like any advice in this respect please contact me on 01462 687333 or email

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