HM Revenue & Customs has issued a warning to around 700,000 flexible and gig-economy workers about the use of so-called “Bills of Exchange”, amid concerns that individuals are being drawn into tax-avoidance arrangements with potentially serious financial consequences.
Officials said promoters are falsely claiming that workers can use Bills of Exchange to settle tax liabilities or pay debts owed to HMRC, despite the mechanism having no legal standing in UK tax law.
HMRC stressed that anyone participating in such schemes remains fully responsible for any unpaid tax, along with interest charges and financial penalties that may be imposed.
The warning comes amid a broader crackdown on marketed tax-avoidance schemes targeting the self-employed, contractors, and those in the rapidly expanding flexible labour market.
Authorities are increasingly concerned that misleading online promotion and word-of-mouth marketing is encouraging individuals to enter arrangements they believe are legitimate alternatives to standard tax payments.
HMRC has repeatedly warned that it will pursue both users and promoters of avoidance schemes where rules are breached, and that liabilities cannot be written off through unofficial financial instruments.
Officials say the message is particularly aimed at workers in gig-economy roles, freelance positions, and short-term contract work, where tax obligations can already be complex and open to misunderstanding.
The intervention reflects a wider effort by HMRC to close down avoidance routes and ensure income tax and National Insurance contributions are properly accounted for across non-traditional forms of employment.
HMRC states: “A Bill of Exchange is defined in the Bills of Exchange Act 1882. It is a note from one person to another, requiring that person to pay a certain sum of money to them or to a third party.
“However it is up to the recipient to decide whether or not to accept the Bill as a form of payment. Even when the Bill has been drawn up according to the legislation, the recipient has no legal obligation to accept it. HMRC does not accept Bills of Exchange against a tax liability.”
The tax office also wrote: “HM Revenue and Customs (HMRC) has seen an increase in customers attempting to use ‘Bills of Exchange’ to pay a tax liability. We are aware that there are promoters, particularly in the recruitment and temporary labour sector, marketing their use. Organised Crime Groups are also particularly active in these sectors.”
Seb Maley, CEO of compliance specialist, Qdos, said: “HMRC’s warning highlights the very real dangers that tax avoidance schemes continue to pose – not just to the some 700,000 people that work through umbrella companies but also the businesses that engage them.
“Bills of Exchange are marketed as legitimate – or even falsely HMRC-approved – despite being anything but. And the truth is, they can leave anyone who uses them with massive tax bills, penalties and years of uncertainty.
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