Contractors’ Comments: Using offshore umbrella companies and the possible fall out contractors could face.

It seems that at times, it can be all too easy to fall into the traps of “higher take home pay”, however as HMRC crack down on offshore schemes, we take a look at what some contractors have had to face, most of whom refer to letters received for the tax year 08/09 and 09/10.


“I have on Friday received a similar letter based on 2008/2009 tax year. I was through Talent Resource Management (Also known as Payscheme Plus, Cherrylon & Redding Capital Finance). There is no trace of this company and have found out they wound up voluntarily in 2010. So I am left either fighting it (and not knowing how without support from the company I used) or paying it the bill? It interesting the wording used in the letter saying the payments received as loans but they believe they relate to professional work and so are taxable. Doesn’t sound like they are convinced what they are asking for…I know it could come back and bite me and am a wiser person now and thankfully I only used it for a year and moved to a limited company, but something niggles me how its worded its almost like it is trying to scare me into paying rather than contesting it.”

“I *also* received this exact same letter today. It is worded exactly the same as yours, word-for-word. Quite a coincidence that we all received them on the same day! Mine also has a tax calculation of what you are supposed to owe. Not sure how they calculated that!?! The tax year they are chasing is 08/09, but I also used this provider in 09/10 and 10/11. My fear is that if you pay up for one year, HMRC will take it for granted that they can try to tackle you for further years.I don’t have a clue what to do in terms of next steps. I think I will try to call tomorrow, and see what they have to say. I am not holding out hope that they will help though.


“I have been with sanzar since 08/09 to 10/11. They are now Darwin & Garraway I have had letters stating HMRC believe they are not loans I have been referred to contractor help desk who have very little info from ex sanzar, it looks like sanzar have done one appointed this help desk and Cobham to buy time Cobham won’t talk to us and the help desk have no knowledge so when he funds run out where does tis leave us with Cobham as its clear they represent sanzar as they are paying them. Does anyone have any suggestions as I don’t have the funds to pay for 3 years.”

“They do indeed seem to be staggering these.. I came home to an HMRC assesment (in the tens of thousands) on my 08/09 SANZAR engagement, on Friday evening, to ensure I had a sleepless weekend.I already had a letter back in December, querying the loans/repayments, during my 10/11 return (which they also managed to deliver on a Friday). For the 2010/11 enquiry I engaged Cobham Murphy, (as advised by Contractor helpdesk) and they told me not to expect any movement before Easter. I have e-mailed Contractor helpdesk regarding the 08/09 assesment but have not had a reply, as yet.”

“Hi, I received the dreaded 08/09 letter a month ago, initially I tried to go through contractor helpdesk/cobham but had concerns about timescales of appeal. My accountant lodged an appeal on my behalf approx 10 days ago & I am still awaiting a response I am extremely worried about this as the amount requested is very large & only relates to part of my time with them.
Obviously I don’t wish to write the content of the reply, they have not requested any further information, just said they would recalculate the figure they had based their assessment on if I had any information on amounts received for that period. They did dismiss the fact it had a fully disclosed DOTAS, stating :- “HMRC does not approve any scheme designed to avoid tax”. Based on another line in the response, I am under the impression they are also able to go back further than the 4 yrs which my accountant had originally advised.“

“I received a letter from HMRC yesterday but not personally seen the letter. My wife mentioned that HMRC is looking for £40,000 from me and I don’t understand I only stayed for 9 months with Sanzar. Feeling very disturbed now and already started questioning whether to sell my house or take loan to stay a HMRC/Bank slave.. Big question.”


“I received a letter back in december 2012 requesting all details of loans for tax year 2010-2011. The letter did not included amounts owed etc. I contacted Sean at Cascade who mentioned Hamilton trust will send out an emailed response which they did. He also mentioned that if HMRC win’s, we as contractors must pay the fine. This email included what they plan to do regarding Kingston Smith etc. I was advised not to respond to HMRC. I have had no further letter from HMRC.”

“My situation is slightly different. Basically Hays placed me on a contract BUT I HAD to use an umbrella company on their PSL list. I fought against this for some time but was told either I use their PSL list or I lose the contract. A bitter pill to swallow after resigning from a perm job. I was then advised to use Cascade. As Cascade was on the Hays PSL, could Hays also be liable regarding HMRC?
Hays provided a full list of umbrella companies on their PSL. However, this was my 1st contact and they advised me to use Cascade as they have close ties/ know each other well! I was told that the reason the list of companies were on their list was due to passing due diligence and Hays would cover any lost wages. If Cascade are on their PSL list, surely they condone the setup/system?“

“And because of this there have already been suicides. And no, I am not joking. I would never joke about something like this. I am very serious. People have taken their own life because of BN66” (referring to the retrospective action taken by HMRC to recover underpayments of tax from users of an offshore avoidance scheme provided by a company called Montpelier.”

If you have any stories to tell with whatever outcome, please let me know and we can help raise awareness of the issues on the site.