Beware of the Two Payment Trick: Protect Yourself from Tax Avoidance Schemes

With tax avoidance schemes on the rise, contractors must stay vigilant against deceptive practices like the “Two Payment Trick.” This scheme involves receiving two payments per pay run, with the first taxed at National Minimum Wage rates and the second appearing tax-free, often labeled as an advance or loan.

While the allure of higher returns may seem tempting, contractors should not be deceived. If HMRC uncovers these irregularities, contractors may be liable for unpaid taxes, ultimately leading to reduced earnings compared to compliant arrangements.

How Does HMRC Detect These Schemes?

HMRC utilises data from Real Time Information submissions by providers, which only show taxed income. Additionally, quarterly reports from recruiters further aid HMRC in identifying potential disguised remuneration schemes and associated workers.

Our Commitment to Compliance

At Parasol, we staunchly oppose disguised remuneration schemes and actively work to eliminate them from the market. Whether or not a provider is FCSA-approved, we encourage reporting of any suspicious arrangements to maintain industry integrity.

Your input helps us uphold the highest standards across our providers and safeguard contractors’ interests.