The Surrey based umbrella company went into liquidation in February and has not filed accounts since January 2023 when it had assets of £274,000 and a sole director Adam Fathers who is also a director of another umbrella company Saxonside which is also subject to a stop notice. When Focus Contractor folded, the company owed HMRC £48,662 in VAT.

Following the issuing of the stop notice, HMRC said the scheme saw users enter into an employment contract with Focus Contractor and were paid the applicable national minimum wage. At the same time, or shortly afterwards, scheme users were issued a share in an Isle of Man protected cell company, Company Y. The share was in a cell that was specific to the scheme user.

Focus Contractor invoiced the recruitment agency or end client for the services carried out by the scheme users based on the hours worked and the appropriate hourly rate. A secondary non-taxed payment is then issued through the Isle of Man business.

HMRC said that an amount of approximately 10% was said to be retained in an escrow account, purportedly to cover the scheme users’ future capital gains tax liabilities.

Focus Contractors Ltd was first identified as a potential avoidance scheme promoter in July 2022 and use third party Isle of Man based Omni Contractors PCC Limited to part pay contractors.

Under the Promoters of Tax Avoidance Schemes (POTAS) regime, HMRC can publish information about promoters of tax avoidance schemes that are subject to a stop notice, alerting individuals to avoid signing up to illegal payment schemes.