For those who may have missed it, yesterday the ESM has been updated to reflect the Umbrella company legislation.
It has guidance on the general application of the legislation, but would draw attention to:
1. ESM2420 - Umbrella companies legislation: Chapter 11 ITEPA 2003- joint and several: Worth noting that HMRC states "If any, or all, of the PAYE tax (and NICs) is not paid, HMRC will pursue recovery of the unpaid amounts from the relevant parties. However, there may be some circumstances where it is appropriate for HMRC to pursue recovery from the umbrella company."
2. The "ESM2435 - Umbrella companies legislation: Chapter 11 ITEPA 2003- framework to collect from agency" has not been drafted and a holding note stating "Official guidance regarding the collection of both Income Tax and National Insurance contributions (NICs) will be made available here in advance of April 2026." is included.
https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm2400
PRESS RELEASE - 4 SEPTEMBER 2025
Barrister exposed as designer of tax avoidance schemes
A practising barrister has today (4 September 2025) been added to HMRC’s list of tax avoidance promoters for the first time.
It is HMRC’s view that Setu Kamal, who has 20 years’ experience as a barrister, designed four tax avoidance schemes and created contract templates that are essential to how these arrangements operate.
These schemes promoted by MLG Pay Limited, The Umbrella Agency Limited, Veqta Ltd, and Vision HR Solutions Ltd typically promise workers they can keep more of their pay by avoiding Income Tax and National Insurance contributions.
HMRC’s position is that these arrangements do not work and that users of them face tax bills, interest and potential penalties.
Jonathan Smith, HMRC's Director of Counter Avoidance, said:
"Legal professionals have a position of trust and responsibility – they shouldn't be involved in creating schemes that purport to let people avoid paying tax that funds our vital public services.
“We want to support those who have used these schemes to exit them and bring their tax position up-to-date. I urge them to contact us as soon as possible so they can settle their affairs."
This naming shows HMRC will not just target the companies and businesses that promote and sell avoidance schemes, but also those who are behind them – no matter their status.
Tax avoidance schemes are marketed as clever ways to pay less tax but rarely work as promised. Users often end up paying more than they originally tried to avoid.
Many of these arrangements operate through umbrella companies and workers in umbrella company schemes should check their payslips carefully. Warning signs include loans instead of wages, minimal tax deductions, or complex payment structures. Workers can use a tool on GOV.UK to work out their pay from an umbrella company.
From April 2026, new legislation has been announced to tackle tax avoidance and fraud by umbrella companies. The new rules would make recruitment agencies that use umbrella companies legally responsible for accounting for Pay As You Earn (PAYE) on workers’ pay.
Anyone worried about tax avoidance schemes should contact HMRC by emailing: CAGetHelpOutOfTaxAvoidance@hmrc.gov.uk
The full list of named tax avoidance schemes, promoters and enablers is available on GOV.UK.
