With the countdown now on until legislation is introduced to tackle tax avoidance in the umbrella company market, scheduled for April 2026, HMRC has already begun to show that its spotlight is aimed clearly at the sector.

As well as increasing levels of media coverage, such as the winding up of Liverpool-based contracting company Umbrella Union accused of promoting tax avoidance, a significant sign of HMRC's growing intolerance of fraudulent activity within the sector is the first tax avoidance Stop Notice issued to an individual, rather than a company.

In May 2025, struck-off solicitor and former barrister Paul Baxendale-Walker was ordered by HMRC to stop promoting two tax avoidance schemes or face penalties or criminal prosecution for failure to comply.

Legislation was introduced in February 2024, making it a criminal offence for promoters who fail to comply with Stop Notices. This legislation also introduced new powers allowing HMRC to act more swiftly to disqualify directors of companies involved in promoting tax avoidance.

The move means Mr Baxendale-Walker's name has now been added to HMRC's current list of named tax avoidance schemes, promoters, enablers and suppliers. The list is a useful resource for employment businesses carrying out due diligence before engaging an umbrella company's services, which the PCA has written about previously here, with the list now exceeding 150 named schemes.

HMRC asserts in a press release that this step to publicly identify and single out an individual demonstrates its 'commitment to use all available powers, regardless of how promoters structure their operations', and explains that the schemes covered by these two Stop Notices involve artificial arrangements, including the use of offshore trusts, designed to claim tax deductions without genuine business purpose. HMRC states that the schemes create complex structures to ensure money remains available to the users while claiming to avoid the tax due.

Jonathan Smith, HMRC's Director of Counter Avoidance, said: "The courts have already concluded that Mr Baxendale-Walker designed and sold multiple tax avoidance schemes that don't work as claimed, and now these Stop Notices send a clear message that we'll use every tool at our disposal to protect public finances from tax avoidance schemes."

In addition, HMRC appeals for information should anyone become aware of Mr Baxendale-Walker continuing to market these schemes, by contacting HMRC on GOV.UK.

The PCA welcomes this growing focus on tackling fraudulent operators that put thousands of workers at risk. As well as tackling those people and companies behind fraudulent schemes, these activities also serve to raise public awareness of the unscrupulous nature of a minority of players.

As a not-for-profit accreditor of fully compliant umbrella companies that have undergone a forensic audit process, the PCA also endeavours to bring more of these unscrupulous activities to light, and to offer a pathway to ethical business via accreditation.