It has come to HMRC’s attention that quite a number of ‘mini umbrella’ companies were created and used for the purpose of exploiting government incentives intended for small businesses, thus reducing their PAYE and tax bills.

If you’re wondering what a ‘mini umbrella’ is, there is no standard definition on it, as these arrangements are constantly evolving in order to hide their fraudulent activities from HMRC. The mini umbrella fraud mainly revolves around exploiting Employment Allowance and the VAT Flat Rate Scheme. The usual structure involves a ‘promoter business’ which may have other linked businesses to support the facilitation of the fraud and reduce their tax and NI bills, and at the same time reducing funding for key public services.

The HMRC’s Fraud Investigation Service is using all its powers to unveil and challenge participants of these and similar schemes. If you’re concerned about potential fraud or tax evasion, you should contact HMRC and notify them.

More information on this topic can be found on the HMRC webpage.