Draft Finance Bill hands HMRC criminal powers over tax-avoidance promoters
The government's Legislation Day package aims squarely at the marketed schemes that have left thousands of contractors nursing unexpected tax bills, but tax bodies warn the net is cast too wide.
The government published draft legislation on 21 July 2025 giving HM Revenue and Customs sweeping new powers — including a criminal offence — to shut down the promoters behind marketed tax-avoidance schemes, many of them sold to IT contractors and other agency workers. The measures, released on the Treasury's annual Legislation Day, will form part of the Finance Bill 2025-26 and follow a consultation launched at the Spring Statement in March.
Stop notices and a new criminal offence
At the centre of the package is a "universal stop notice", which would let HMRC bar every promoter from selling a named avoidance scheme, rather than issuing separate notices firm by firm. Breaching such a notice would become a criminal offence. A second tool, the "promoter action notice", would compel third-party businesses to stop providing services to a promoter once HMRC has acted against it.
The draft clauses also widen the Disclosure of Tax Avoidance Schemes regime, allow HMRC to levy penalties without first seeking approval from a tribunal, and hand the department stronger powers to pursue the "controlling minds" who own or run promoter businesses. Separate provisions target legal professionals who design or help market the schemes.
A shrinking but stubborn market
HMRC estimates that around £500 million of the current tax gap relates to marketed avoidance sold to individuals, down from £1.5 billion in 2005-06. Roughly 36,000 people were using such schemes in 2022-23, promoted by an estimated 20 to 30 organisations still active in the market. By the end of 2024 the department had named 135 schemes, identified 129 promoters and issued 21 penalties worth more than £41 million. HMRC publishes a running list of named schemes and promoters, though enforcement bodies note that promoters routinely dissolve and re-emerge under new names.
The market is now overwhelmingly built on disguised remuneration — arrangements that pay contractors through loans or other devices to disguise income and sidestep PAYE. James Murray, the Exchequer Secretary to the Treasury, said in a written ministerial statement that the government would "close in on promoters of marketed tax avoidance, whose contrived schemes leave their clients with unexpected tax bills".
What it meant for contractors
For contractors, the significance lies less in the promoters HMRC catches than in the bills left behind when a scheme collapses. Disguised remuneration arrangements have repeatedly been marketed to IT and other professional freelancers as compliant umbrella payroll, only for HMRC to pursue the worker — not the promoter — for the unpaid tax years later. Faster stop notices are intended to choke off new schemes before they spread.
The Chartered Institute of Taxation welcomed the intent but warned the drafting was "far too broad and could result in a distortion of the market, whereby advisers will withdraw from giving certain types of advice". It cautioned that the proposals were "not well targeted", imposing "potentially unworkable conditions" on mainstream tax agents while many of the "bad actors" who are the real target "will be out of scope and able to continue their abuse of the system".
The draft legislation remains subject to change before the Finance Bill is finalised at the Autumn Budget. For the contractors already carrying the cost of failed schemes, tougher powers against their promoters will arrive years too late.