The HMRC has issued a stop notice to an island-based firm accused of promoting tax avoidance.
Adapt Limited and its director David Michael Yeomans have been added to the HMRC’s list of named tax avoidance schemes, promoters, enablers and suppliers.
The company, which is registered at Harbour Court, Lord Street, Douglas, is accused of operating a scheme involving complex financial arrangements with umbrella companies in the UK to reduce tax liability for individuals by routing their income through various entities and structuring payments as loans rather than wages.
HMRC’s stop notice requires Adapt Limited to stop selling or promoting the scheme.
The UK umbrella companies are named as Manchester-based Frank Umbrella Limited (in liquidation) and Cleethorpes-based TGI Payday Limited.
HMRC explained that the scheme users signed a contract of employment and commercial loan agreement with Adapt Limited, and the two UK umbrella companies then entered into an agreement for the provision of the services.
These UK umbrella companies then contracted the scheme user’s services to a UK intermediary/agency which in turn contracted them to the end client.
The end client paid the UK intermediary/agency for the services, who in turn paid the UK umbrella companies.
Following the deduction of a fee, the UK umbrella companies paid the remaining amount to Adapt Limited.
HMRC said Adapt Limited paid a national Minimum Wage/Living Wage salary to the scheme user subjected to income tax and National Insurance contributions and a payment, described as a loan, pursuant to the loan agreement, which was made without deductions of income tax or NI contributions.