The tax authority in the UK has named a Douglas-based company as a promoter of a tax avoidance scheme.

Tax avoidance is legal in the UK, unlike tax evasion, however if they are challenged and defeated by HMRC, users can find themselves liable to the full tax amount and a fine.

Thursday saw Her Majesty’s Revenue and Customs name three promoters of tax avoidance and tax avoidance schemes in order to ‘warn the public so they can steer clear of or exit these schemes’.

One of those companies, Novus Consultants Limited (formerly Novus Limited) (NOL) / Contractor Corner Accounting Limited (CCA), is based in Queen Victoria House, Victoria Street, Douglas.

Outlining how the scheme is alleged to work, HMRC said: ‘Scheme users sign an employment contract and a “Commercial Loan Agreement” (CLA) with NOL.

‘The user will be paid a salary based on National Minimum Wage (NMW) that is taxed, and a second payment that is not taxed under the CLA. NOL retains around 20% of the gross contract earnings.’

Through this, HMRC says a salary payment based on NMW through the payroll is taxed, while the ‘loan’ which is not done through the payroll and is not taxed.

The other two companies named by HMRC are Liverpool-based T2 Outsourcing Limited and Paybox Umbrella Limited of Leeds and Malta.

HMRC said: ‘If you are involved in any of the tax avoidance schemes shown on the lists, or recognise any of the promoters, enablers or suppliers, and are not already talking to HMRC about your tax position you should contact HMRC as soon as possible.’