HMRC has issued a warning about organisations promoting models that claim to reduce employment costs through ‘tax credits’ linked to third-party businesses. These arrangements are considered tax evasion and can lead to severe penalties.
False Tax Credit Schemes
Some organisations are approaching businesses with schemes that claim to cut employment costs using ‘tax credits’ from other companies they’ve acquired. These organisations may present themselves as payroll providers, intermediaries, umbrella companies or back-office providers.
They claim they can use these tax credits to offset employment taxes like PAYE and National Insurance, reducing what you pay. In reality, these taxes often aren’t paid to HMRC at all. Instead, they may simply withhold payments or create false documents to make it look like returns and payments have been made.
These schemes are fraudulent and can put your business at serious risk.
What HMRC Says:
HMRC considers these schemes tax fraud. They:
- Put your business at risk
- Can lead to financial penalties and reputational damage
- Are being actively investigated
Source: HMRC’s policy paper: Tax fraud warning for employment agencies and employers: tax credits reducing liabilities for employers - Published 14th November 2025.
How Blue Arrow Helps
✔ Fair and competitive pricing
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Why Compliance Matters
Compliance isn’t just a box to tick, it’s your business lifeline.
Imagine this: A company saves thousands through a ‘tax credit’ scheme. Months later, HMRC investigates. Penalties follow. Reputation suffers. Company suffers loss of customer, employee and public confidence.
This isn’t hypothetical - it’s happening now.
Blue Arrow stands for integrity in recruitment. We partner with businesses to ensure every hire is legal, fair and future-proof.
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