Procorre LLP Tax Avoidance Scheme Named by HMRC

Under the Spotlight

Procorre LLP is an arrangement that facilitated the supply of contractor’s services to their end clients from the early 2010’s onwards.  Whilst HMRC have been enquiring into those who used Procorre for the best part of a decade, they recently placed the scheme under the microscope by publishing details of the arrangement and adding it to their list of tax avoidance arrangements which the tax authority makes available on their website.

More information on the schemes named by HMRC can be found here.

What is Procorre and How Does the Scheme Work?

Procorre LLP is a limited liability partnership (LLP) which is allegedly registered in Singapore. LLP’s take various forms, but they generally allow both individuals and companies to act as one in providing goods or services whilst splitting the profits between the members in an agreed ratio.

The Procorre arrangement claims to work by a contractor, and normally the contractors own personal service company (PSC), joining as a member of the LLP. The PSC will then invoice the end client for the services of the contractor with the receipts being passed to Procorre LLP as income of the partnership.  That income is then returned to the contractor, minus a fee, in the form of borrowings from the LLP’s capital account, a business development fund payment, and pre-paid expenses card.  All these are said not to attract tax as they are not profits of the partnership.

Prior to April 2019 Procorre made an offer to acquire contractors PSC’s and valued them on the basis of future years contracts. The consideration for the purchase would be deferred over the following two years, and some of that consideration would be used to clear the overdrawn capital account of the LLP.  HMRC have indicated they also believe this to be an avoidance scheme, possibly to escape tax under the loan charge legislation.

Have You Used Procorre?

If you are currently using Procorre or have previously been involved with the arrangement or an associated scheme, HMRC encourage you to exit the arrangement and work to resolve your tax position as soon as possible.

Did you use Procorre? We can help. WTT has vast experience on managing Procorre enquiries and settlements from which we have obtained key knowledge in relation to how the arrangement worked.

For more information or to speak with an advisor regarding your position, get in touch with our experts today.