Tax avoidance promoter fined £1 million

A tax avoidance scheme promoter has been hit with a £1 million fine after a legal challenge by HM Revenue and Customs (HMRC).

Hyrax Resourcing Ltd was handed the almost-maximum allowed fine by the First Tier Tribunal for failing to disclose an avoidance scheme to HMRC as legally required.

Hyrax promoted a disguised remuneration scheme that involved routing money to an offshore trust in Jersey. The scheme was the successor to the K2 avoidance scheme that made headlines in the early 2010s.

This ruling follows a previous HMRC tribunal win in 2019 where Hyrax was ordered to provide the details of the avoidance scheme they promoted and its users.

Mary Aiston, HMRC’s Director of Counter-Avoidance, said:

“This £1 million fine should serve as a stark warning to tax avoidance promoters. Those who ignore their legal duty will face serious consequences.

“We actively tackle promoters of tax avoidance schemes and are determined to drive them out of business. We continue to use the full force of the law to challenge tax avoidance scheme promoters.”

Hyrax failed to disclose a disguised remuneration scheme that paid users the National Minimum Wage, with the remainder of their earnings paid as loans which were transferred to an offshore trust in Jersey. These loans were not declared as income on the scheme users’ tax returns, meaning they didn’t pay tax on all of their earnings.

In its ruling, the tribunal described Hyrax’s failing to disclose the scheme as “a very serious matter” and the “statutory maximum penalty is appropriate”.

The tribunal fined Hyrax the maximum £600 a day for failing to disclose these details for 1,791 days, resulting in a total fine of £1,074,600.

This recent win supports HMRC’s wider work to drive tax avoidance schemes and their promoters out of business, including its Tax Avoidance: Don’t Get Caught Out campaign.

Earlier this year, HMRC used new powers to publicly name tax avoidance schemes and their promoters. To date, 7 tax avoidance schemes and promoters have now been named and exposed by HMRC, 2 of which have since gone into liquidation.

HMRC provides a range of other tools to customers to help customers steer clear of avoidance schemes, such as their interactive risk checker, payslip guidance, and case studiesdemonstrating the risks of becoming involved in a tax avoidance scheme.

Notes to editors

1. The First Tier Tribunal decision can be read in full online.
2. A press notice detailing the previous First-Tier Tribunal ruling of 2019 against Hyrax, which forced them to provide us with the legally required scheme details and users, can also be read online.
3. Under Disclosure of Tax Avoidance Scheme (DOTAS) rules, tax avoidance scheme promoters are required to share the details of the scheme(s) they promote from the date that the scheme is first sold, as well as the details of the scheme’s users.
4. HMRC regularly publishes the names of tax avoidance schemes and their promoters online, as a part of their wider work to ensure customers Don’t Get Caught Out by Tax Avoidance.
5. To report tax avoidance schemes and those offering you the schemes to HMRC, please visit our Report Tax Fraud Online Form.
6. Customers can use HMRC’s interactive risk checker to find out if their employment arrangements could involve tax avoidance.
7. HMRC’s payslip guidance also helps customers check their payslips make sure they are not involved in one of the tax avoidance schemes that are operated by some umbrella companies.
8. Further information about our strategy on tax avoidance schemes and promoters can be found on GOV.UK.
9. Follow HMRC’s Press Office on Twitter @HMRCpressoffice