HMRC Wins Upper Tribunal Case Against Mini Umbrella Company Fraud, Tightens Compliance Rules

• HMRC won a case against fraudulent mini umbrella companies on 17 July 2025.
• Mini umbrella companies are small entities set up to abuse tax reliefs.
• The Upper Tribunal confirmed these companies exploited the VAT Flat Rate Scheme and Employment Allowance.
• The ruling strengthens HMRC’s ability to deregister these companies from VAT.
• HMRC can challenge the misuse of the Flat Rate Scheme and fraudulent Employment Allowance claims.
• From April 2026, recruitment agencies must ensure correct tax payment on workers’ income.
• If no agency is involved, the end client is responsible for tax compliance.
• HMRC issued updated guidance on identifying mini umbrella company fraud.
• The decision emphasizes HMRC’s commitment to tackling tax system abuse.
• Businesses in labor supply chains need to review their arrangements to avoid liabilities.

Source: deeksvat.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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