Warning for agency workers and contractors who are moved between umbrella companies (Spotlight 71)
Source: gov.uk (2025-06-12)

How to avoid being involved in tax avoidance schemes, if you are moved between umbrella companies as an agency worker or contractor.

Some umbrella companies encourage agency workers and contractors to use tax avoidance schemes. These schemes do not follow UK tax rules. They often move workers between different umbrella companies to hide the tax avoidance from HMRC.

HMRC does not approve or endorse umbrella companies or tax avoidance schemes. Non-compliant umbrella companies often claim that these tax avoidance schemes allow agency workers and contractors to keep more of their earnings. However, this is not true.

Tax avoidance schemes that make these claims do not deduct and pay the correct amount of tax and National Insurance contributions for you. As a result, you could end up owing HMRC money or not receive the benefits you are entitled to.

It’s your responsibility to make sure that you know how much tax and National Insurance you should be paying.

You may already be using an umbrella company that is operating tax avoidance or a fraudulent scheme, without knowing it.

Warning signs of tax avoidance

There are a number of signs to look out for to help identify whether you might be involved in tax avoidance. There are several areas you should check to identify these warning signs. These can include (but are not limited to) your:
- employment contract
- payslip information
- salary payments
- schemes or promoters being known for tax avoidance
Employment contract

You should always make sure you read your contract carefully, including the small print and disclaimers, so you understand what you are signing up for and why.

Warnings of signs of tax avoidance related to your umbrella company contract could be if you:

are unexpectedly moved to a new umbrella company, at short notice or with very little paperwork

sign a contract with one company but you are paid by another company that might have a similar name or could be based overseas

are asked to sign a new employment contract or a different agreement, such as an annuity agreement in addition to your employment contract

Signing more than one employment contract is not standard practice and could indicate being moved to another scheme.

Payslip information

Employers are legally required to give their employees a payslip on or before their payday, so make sure that you receive one and check it regularly.

Warning signs of a non-compliant umbrella company could be:
- your PAYE reference, employer name or the way you are being paid is unexpectedly changed
- your payslip shows significantly less pay than you expected or received in previous employments
- your payslip shows less pay than the amount that is paid into your bank account
- the correct amount of tax and National Insurance contributions has not been deducted from your total amount of earnings
- you suddenly receive a paper copy of your payslip instead of an online version
- you are moved to a new payroll system, or you can no longer access the online portal of a previous company to view your payslips
You can use your personal tax account (https://www.gov.uk/personal-tax-account), to check if the information we hold matches what is shown on your payslip and report any concerns to us.

You can work out what your gross and net pay (take-home pay) should be from an umbrella company (https://www.gov.uk/guidance/work-out-pay-from-an-umbrella-company).

Salary payments

A sign of tax avoidance could be if you are unexpectedly moved to a new payroll system. This could be a sign that we are taking action to prevent the old company from promoting a tax avoidance scheme.

If you’re moved to a new payroll system, you may be told by your umbrella company that:
- your terms and conditions of employment will remain the same
- the back-office team, communications, the structure of operations and staff will not be changed
- you do not need to take any action
- the move is because the current payroll has too many employees
These could all be signs of a non-compliant umbrella company. We do not limit the number of employees on a company’s payroll.

To avoid being caught out, you should check your bank statements regularly. You should make sure your pay is received as a single payment, and not made up of multiple payments that have not all been taxed.

Schemes and promoters known for tax avoidance

You can check our list of named tax avoidance schemes (https://www.gov.uk/government/publications/named-tax-avoidance-schemes-promoters-enablers-and-suppliers). This includes some of the names of people involved in promoting them.

It is not a complete list of all tax avoidance schemes currently being marketed. If a tax avoidance scheme or promoter is not shown in the list, this does not mean that they are in any way approved by HMRC.

We use taxpayer data to identify and warn anyone who may be using an avoidance scheme. We also write to customers on the list of named schemes. If we send you a letter saying you might be involved in tax avoidance, you should check your employment details and consider getting independent professional advice.

If you are involved in any of the listed schemes or recognise any of the promoters, enablers or suppliers you should contact us (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/tax-avoidance-getting-out-of-an-avoidance-scheme) as soon as possible.

If these warning signs apply to you

If you recognise any of the warning signs detailed in this guide or you are worried about your employment, you should contact your umbrella company in the first instance. You should ask about the information they have sent you.

Some non-compliant umbrella companies may not respond to you in writing or email, to avoid written evidence of tax avoidance. They may also:

ask you not to share any details with us

offer to act on your behalf in dealing with us

offer to deal with us for free

recommend (or even pay for) another company to deal with us on your behalf

These could all be signs that they are trying to distance themselves from being caught operating a tax avoidance scheme.

Get advice on tax avoidance

If your umbrella company is operating a tax avoidance scheme, we strongly advise that you move to a compliant umbrella company as soon as possible.

If you think you are involved in tax avoidance you should contact us (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/tax-avoidance-getting-out-of-an-avoidance-scheme) to prevent building up a large tax bill. It is always best to cooperate with us so that we can help you deal with your tax affairs. We offer a range of support to get you back on track and can help you avoid being caught out in the first place.

If you are concerned about a scheme that you are considering joining or currently using, you should get independent professional advice. If you are on a low income, you can use a tax charity, such as Tax Aid to get help with your taxes. For information on how to contact them for personal tax advice, you can visit the TaxAid website (https://taxaid.org.uk/contact).

Report an umbrella company and scheme

You can report tax avoidance to us anonymously and you do not have to give your name, address or your email.

You can report tax avoidance (https://www.gov.uk/report-tax-fraud) by submitting the online form, or by calling us if you cannot use the online form.

Paying your tax

You can talk to us about options for paying any unpaid tax.

If you’re facing difficulty in making a tax payment, you should ask us about affordable monthly payment options. We’ll always try to work with you to negotiate time to pay based on your personal circumstances. We may ask for details on your income and expenditure to help work out what you can afford to pay and over what time period.

By withdrawing from the arrangements and settling your tax affairs, you will:
- minimise interest and penalty charges (where they apply) on tax you should have paid
- avoid any costs of investigation and legal action
If you’re already speaking to someone in HMRC about your use of an avoidance scheme, you should contact them to discuss this further.

If you do not have a HMRC contact and you want to pay any unpaid tax due, read our guidance on settling your tax affairs (https://www.gov.uk/guidance/disguised-remuneration-settling-your-tax-affairs).

Get more information

Find out more information on umbrella companies as an agency worker or contractor, and how to avoid getting involved in tax avoidance schemes:
- find out how to spot the signs of tax avoidance schemes (https://www.gov.uk/government/publications/tax-avoidance-facts)
- watch a short YouTube video on umbrella companies: what are the risks to contractors (https://www.youtube.com/watch?v=XZUUc8UNb3c)
- find out if an agency or umbrella company offers to reduce your tax liability and increase your take home pay (https://www.gov.uk/guidance/umbrella-companies-offering-to-increase-your-take-home-pay-spotlight-45) (Spotlight 45)
- find out tax avoidance arrangements used by some umbrella companies (https://www.gov.uk/guidance/warning-for-agency-workers-and-contractors-employed-by-umbrella-companies-spotlight-60) (Spotlight 60)
- find out more about mini umbrella company fraud (https://www.gov.uk/guidance/mini-umbrella-company-fraud)
- use HMRC’s ‘Tax Avoidance — don’t get caught out’ (https://taxavoidanceexplained.campaign.gov.uk/) campaign for more information on how to spot non-compliant umbrella companies