Draft 2

Non-compliant payroll schemes and the 2019
Loan Charge
Following on nicely from the Criminal Finances Act, a further
reason for contractor recruitment businesses to secure their
supply chains is the risk from non -compliant payroll schemes.
In April 2019, HMRC’s Loan Charge will see contractors who have
used non-compliant schemes in the past receive retrospective
tax demands going back as far as 1999.
The most common of these contrived avoidance arrangements
have been loan schemes which usually work by paying
contractors a low salary with a high proportion of their pay as a
loan.
Employees NI
12%
Employers NI
15%
PAYE Tax
21%
Take Home Pay
52%
Tax Evasion
Take Home
90%
Referring contractors to, or paying them through what HMRC
views as a disguised remuneration scheme will put your business
reputation and relationships at risk, so always carry out due
diligence on any payroll intermediaries or umbrella companies
you engage with.
NI
Tax
Employment Intermediaries Reporting
Under the Onshore Intermediaries Legislation 2014,
employment businesses must return details of all workers they
place with clients where they don’t operate PAYE on the
workers’ payments.
This includes workers engaged through umbrella companies or
via their own limited company.
This requirement under the legislation takes the form of a report
sent to HMRC every 3 months.
Agency Workers Regulations (AWR)
Introduced in 2010, these regulations form part of UK labour law.
They aim to prevent discrimination of people who work through
employment agencies, by stating that agency workers should
not be treated less favorably than their full-time counterparts
who do the same work.
The regulations cover things like pay rates, working time, holiday
pay and benefits.
DRAFT 2