Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what comparative assessment he has made of trends in the levels of tax avoidance and the increase of people employed by umbrella companies following the IR35 reforms.

On 30 November 2021, HMRC published its latest report on the use of marketed tax avoidance schemes in the UK. The report included estimates of the number of individuals and employers using avoidance schemes in each tax year between 2013-14 and 2019-20, as recorded in its avoidance database. The report is available here: https://www.gov.uk/government/publications/use-of-marketed-tax-avoidance-schemes-in-the-uk/use-of-marketed-tax-avoidance-schemes-in-the-uk-2019-to-2020

Estimates for later tax years are due to be published in future reports.

The Government also published a Call for Evidence on 30 November 2021 on the umbrella company market, inviting views on the role that they play in the labour market and the ways in which they interact with the tax and employment rights systems.

The Call for Evidence sets out the external analysis and is available here: http://www.gov.uk/government/consultations/call-for-evidence-umbrella-company-market

The HMRC data suggests that the overall umbrella company market has grown substantially since it first became popular 20 years ago. Many umbrella companies are compliant with the tax rules and HMRC will continue to take action against those that are not.

HMRC analysis suggests that at least 500,000 individuals were employed by an umbrella company in the 2020-21 tax year and early HMRC data suggests that usage of umbrella companies continued to increase after April 2021.