Tax Tribunal backlog soars following HMRC crackdown on fraudulent umbrella companies

The number of cases waiting to be heard in the First-Tier Tax Tribunal has increased 84 per cent over the previous year to heights of 46,000, according to UK government figures.

The number of new claims has also increase 738 per cent over the past year from 1,200 at the end of June 2021 to over 10,000 at the end of June 2022.

The uptick follows HMRC’s warning that some umbrella companies are avoiding tax by disguising payments to workers as non-taxable loans, grants, and annuities.

Umbrella companies act as intermediaries between temporary contractors and employers in processing workers’ pay and providing payroll, tax, and other back-office services.

HMRC has particularly targeted so-called mini-umbrella companies that defraud the government by avoiding taxes including VAT.

Read more at City A.M.