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Umbrella Companies utilising Disguised Remuneration used by HMRC and RCDTS
Source: WhatDoTheyKnow
Authority: HM Revenue and Customs
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SOURCE: WhatDoTheyKnow
SOURCE_URL: https://www.whatdotheyknow.com/request/umbrella_companies_utilising_dis
TITLE: Umbrella Companies utilising Disguised Remuneration used by HMRC and RCDTS
AUTHORITY: HM Revenue and Customs
AUTHORITY_URL: https://www.whatdotheyknow.com/body/hmrc
STATUS: The request was
partially successful
.
REQUEST_SLUG: umbrella_companies_utilising_dis
CAPTURED_AT: 2026-05-19T07:18:08+00:00
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ATTACHMENTS:
- FOI2020_01611.pdf | https://www.whatdotheyknow.com/request/umbrella_companies_utilising_dis/response/1651273/attach/3/FOI2020%2001611.pdf?cookie_passthrough=1 | application/pdf | 209456 bytes
- [not downloaded] | https://www.whatdotheyknow.com/request/umbrella_companies_utilising_dis/response/1651273/attach/html/3/FOI2020%2001611.pdf.html | | 0 bytes
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MESSAGE 1 [outgoing]
HEADER: George Cruickshanks
7 September 2020
Delivered
--------------------------------------------------------------------------------
Dear HM Revenue and Customs,
Please can you supply me with any information that you have Regarding the utilisation of umbrella companies or agencies that used disguised remuneration within HMRC & RCDTS LTD since 2010, when according to the Morse inquiry, the law became clear with regards to their usage.
I would like the information to contain, but not limited to, audit reports for HMRC and subsidiaries where comments and observations of such schemes exist.
Yours faithfully,
George Cruickshanks
================================================================================
MESSAGE 2 [incoming]
HEADER: foi.team@hmrc.gsi.gov.uk on behalf of FOI Central Team,
HM Revenue and Customs
8 September 2020
--------------------------------------------------------------------------------
Our ref: FOI2020/01611
Dear Mr Cruickshanks,
Freedom of Information Act 2000 Acknowledgement
Thank you for your communication of 7th September which has been passed to
HMRC's Freedom of Information Team.
We have allocated the above reference which you should quote if you need
to contact us.
The Team will arrange for a reply to be sent to you which will either
comply with HMRC's obligations under Freedom of Information Act or, if we
think it's an enquiry that we don't need to address under the terms of the
Act, let you know why. If it is the latter we will, if possible, pass it
on to a more appropriate part of the Department for answer.
As you will appreciate, the coronavirus pandemic has provided
unprecedented challenges for Government Departments including HMRC. Over
the coming weeks our priorities are to provide critical existing and new
Public Services for Government to support customers during this difficult
time. As a result, resources may be diverted away from usual compliance or
information rights work. HMRC aims to respond to all FOIA Requests within
20 working days. If for whatever reason this timescale cannot be complied
with HMRC will, where possible, write to you explaining the reason for the
delay and providing an estimated time for response.
Yours sincerely
HMRC Freedom of Information Act Team
================================================================================
MESSAGE 3 [incoming]
HEADER: no-reply@hmrc.ecase.gsi.gov.uk on behalf of FOI Team,
HM Revenue and Customs
5 October 2020
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FOI2020 01611.pdf
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Dear Mr Cruickshanks,
We are writing in response to your request for information, received 7
September.
Yours sincerely,
HMRC Freedom of Information Team
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ATTACHMENT TEXT EXTRACTION / OCR
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ATTACHMENT: FOI2020_01611.pdf
TEXT_FILE: FOI2020_01611.pdf.txt
METHOD: pdf_native
OCR_USED: False
PAGES: 3
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--- PDF page 1 ---
Information is available in large print, audio and Braille formats.
Text Relay service prefix number – 18001
Freedom of Information Team
S1715
6 Floor
Central Mail Unit
Newcastle Upon Tyne
NE98 1ZZ
Mr George Cruickshanks
By email: request-690041-
e2419f20@whatdotheyknow.com
Email
foi.request@hmrc.gov.uk
Web
www.gov.uk
Date: 5 October 2020
Our ref:
FOI2020/01611
Dear Mr Cruickshanks
Freedom of Information Act 2000 (FOIA)
Thank you for your request, which was received on 7 September, for the following
information:
“Please can you supply me with any information that you have Regarding the utilisation of
umbrella companies or agencies that used disguised remuneration within HMRC & RCDTS
LTD since 2010, when according to the Morse inquiry, the law became clear with regards to
their usage.
I would like the information to contain, but not limited to, audit reports for HMRC and
subsidiaries where comments and observations of such schemes exist.”
Where this letter refers to contractors of HMRC, this includes Revenue and Customs Digital
Technology Services Ltd.
In November 2018, responding to a letter from the House of Lords Economic Affairs
Committee, Ruth Stanier, Director General of Customer Strategy and Tax Design set out
that:
‘HMRC has never participated in disguised remuneration tax avoidance schemes, for
example by remunerating contractors through loans or payments to trusts. It is possible for
contractors to use disguised remuneration without the participation or knowledge of their
engager. Any HMRC contractor identified in the course of our compliance work as using a
disguised remuneration scheme would be investigated in the same way as any other
contractor.’
The majority of HMRC’s contracts are for contingent labour via an agency, and we use the
Crown Commercial Service’s framework contracts for this. These contractors form a flexible
complement to our workforce, sourced through an employment agency.
With contingent labour there is always at least one agency between HMRC and the
individual contractor, although in practice this contract can be further sub-contracted,
meaning there are multiple agencies between the department and the contractor
themselves.
--- PDF page 2 ---
2
OFFICIAL
There are other contractors who provide services as part of fully contracted out professional
service provisions. In these circumstances, the arrangement is between HMRC and the
supplier. The contractors then have their own arrangements with and are directly managed
by the supplier.
All contracts with agencies supplying contractors to HMRC include standard tax compliance
clauses. This is for both fully contracted out provision and contingent labour. There is also
clear guidance around tax compliance and what checks will be completed on anybody
supplying labour to HMRC on GOV.UK.
Any engagement of a supplier to HMRC will result in mandatory tax compliance checks
being carried out. As HMRC’s agreement will be with a supplier or agency this will be on the
company itself and its directors rather than individual contractors.
However, prior to a contingent worker commencing an assignment with HMRC, they must
acknowledge acceptance of clauses regarding “Compliance with Tax Legislation”. This
requires the worker to declare acceptance of a number of terms, including that “[the worker]
complies with its obligations under [the Disclosure of Tax Avoidance Schemes rules] and is
not involved in any way in any arrangement that is contrary to [the General Anti-Abuse Rule]
or any arrangement which has been spotlighted by HMRC as an unlawful tax avoidance
scheme.”
As HMRC are not involved in the payment arrangements between their suppliers and
individual contractors the department have not and could not have participated in such
avoidance schemes. On that basis HMRC does not hold information regarding the ‘usage of
disguised remuneration within the HMRC’ because, as Ruth Stanier said in her letter to the
HoL EAC, we have never used such tax avoidance schemes.
However, as Ruth acknowledged in her letter, HMRC are not privy to the arrangements
between suppliers and their contractors, it is possible that a contractor might have used a
disguised remuneration (DR) tax avoidance scheme without HMRC’s knowledge. If HMRC
discovered that a contractor had done so, in breach of our “Compliance with Tax Legislation”
clauses, our policy would be to remove them from the department and deal with their tax
affairs in the same way as any taxpayer who had used such a scheme.
It may help if I explain that, to inform the letter from HMRC to the House of Lords Economic
Affairs Committee, analysis of the contractor records held was completed. In accordance
with departmental retention policy, and in preparation for ensuring compliance with the 2017
reforms to the off-payroll working rules, HMRC held a complete central record of
departmental contractor engagements from 2016. The analysis involved clashing the details
of individual contractors against the list of known users of DR schemes. The result of this
analysis would show whether a contractor had used a DR scheme.
This work identified five contractors who had a history of using DR avoidance schemes and
had previously been engaged by HMRC. In all cases, the periods of scheme usage did not
run concurrently with the period for which they were engaged by HMRC. On this basis it was
determined that HMRC did not hold any records of a contractor being engaged whilst using
a DR scheme.
HMRC’s database of known avoidance scheme users is constantly updated and enriched.
Also, the database of contractors is dynamic as new contractors are constantly being
engaged and other contractors reach the end of their engagements. Between November
2019 and July 2020, the analysis was run a further two times alongside further compliance
activity.
This analysis indicated a number of existing contractors where it was possible they were
using a DR scheme. Compliance teams concluded that 13 contractors were highly likely to
be current or previous users of a DR scheme.
--- PDF page 3 ---
3
OFFICIAL
HMRC/RCDTS acted promptly once it had been informed of the results of the cross-
referencing exercise, terminating the relevant engagements within two weeks of being
informed.
If you are not satisfied with this reply you may request a review within two months by
emailing foi.review@hmrc.gov.uk, or by writing to the address at the top right-hand side of
this letter.
If you are not content with the outcome of an internal review you can complain to the
Information Commissioner’s Office.
Yours sincerely,
HM Revenue and Customs