A Glasgow umbrella company has been named for paying workers from the health and tech sectors partly untaxed payments for agency work
Glasgow-based Paystone Services Ltd, which is also known as Artifact Services, has been added to the HMRC list of tax avoidance scheme promoters, after paying users a mix of national minimum wages taxed at source and untaxed 'share payments'.
This leaves individual taxpayers liable for tax bills and it is not clear that the agency provides adequate advice to users that they are personally liable for the tax payments, while Paystone Services avoids paying employer national insurance contributions, and fails to follow employment tax rules.
Paystone Services, which is also known as Artifact Services, operates as a sole trader with one director, Laura Bramwell, who was appointed in 2021. The business was set up in November 2018.
Limited information on Paystone Services is available on Companies House and the accounts showed that the business had outstanding creditors totalling £555,292 for year end October 2022, the latest balance sheet on file, published last October.
The website claims that Paystone Services will handle the ‘time consuming admin’, and ‘your payments and PAYE submissions will be handled by our industry professionals making sure you’re always on top of your legal deductions’. It cites clients including the NHS, Canon, Ovo Energy and Samsung.
HMRC has published details of the scheme, naming the umbrella company as a tax avoidance promotor.
Paystone Services pays freelance contractors a salary, which was approximately at the national minimum wage or national living wage rate, with tax and National Insurance contributions (NICs) deducted. However, the individuals were also paid a secondary payment without deduction of tax and NICs.
The secondary payment was labelled as ‘share payment’, ‘option payment’ or ‘something else’, HMRC said. The secondary payment was the remaining balance of their contractual payment for the work carried out, minus a fee that Paystone Services deducted for the operation of the scheme.
The scheme was targeted predominantly at workers within the health, tech and energy sectors. Those in health include doctors, nurses, speech therapists and podiatrists.
HMRC does not accept these arrangements work as claimed. Tax and NICs should be accounted for on both payments under PAYE as they are made in respect of work carried out by the scheme user.
‘The two payment arrangements are set up purely to facilitate a disguised remuneration tax avoidance scheme,’ HMRC said.