HM Revenue & Customs has fired a fresh warning shot at Britain’s flexible workforce, urging an estimated 700,000 umbrella workers, and the agencies and end-clients that engage them, to steer well clear of a rapidly growing scheme that claims, falsely, that personal IOUs can be used to settle a tax bill.
In a formal issue briefing published this month, the tax authority confirmed it has seen a sharp uptick in attempts to discharge PAYE and other liabilities using so-called ‘Bills of Exchange’. Promoters, many of them linked to the recruitment and payroll sectors, are marketing the arrangements as a legitimate, and in some cases, brazenly, as a government-endorsed, route to wiping out a tax debt.
They are nothing of the sort.
“HMRC does not accept Bills of Exchange against a tax liability,” the department said bluntly, adding that Organised Crime Groups are “particularly active” in the temporary labour space where the schemes are being aggressively pitched.
What is a ‘bill of exchange’?
The instrument itself is a creature of Victorian commerce, codified in the Bills of Exchange Act 1882. In plain terms, it is a written note from one party requiring another to pay an agreed sum to them or to a third party on demand or at a fixed future date — the original mercantile ‘IOU’.
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