Director of suspected HMRC tax avoidance scheme continues to be member of professional body

Despite his company being ‘named and shamed’ by HMRC for alleged involvement in disguised remuneration schemes, Paul Ruocco continues to be a member of the Institute of Chartered Accountants of England and Wales.

TaxWatch have submitted a formal complaint to the ICAEW about one of its members, Paul Ruocco, the director of Gateway Outsource Solutions Limited which HMRC suspects may be promoting disguised remuneration tax avoidance schemes. This is the fourth complaint lodged by TaxWatch to professional bodies.

The scheme

Last year HMRC began ‘naming and shaming’ companies with its ‘Current list of named tax avoidance schemes, promoters, enablers and suppliers’.¹ One company that features on this list is Gateway Outsource Solutions Limited, whose director is Paul George Ruocco. It appears from information published by HMRC, that users of Gateway’s scheme entered into an employment agreement with a Maltese company, Gateway Outsource Solutions Limited (Malta), before receiving two salary payments – one paid at minimum wage, and a second which is described as a loan or an advance, which is not taxed. HMRC suspects this to be a disguised remuneration scheme, a scheme that HMRC has been stating for years does not work, and the so-called loans to individual workers, are subject to income tax and National Insurance contributions.

The company’s financial statements for 2018, 2019, 2020, and 2021 all state that there is only one employee of the company – with Companies House listing Mr. Ruocco as the sole director during these years.

Mr. Ruocco is also a member of the Institute of Chartered Accountants of England and Wales (ICAEW), an organisation which is supposedly governed by the Professional Conduct in Relation to Taxation (PCRT). The PCRT was developed by the ICAEW and others including the Chartered Institute of Taxation in response to the government’s challenge to the professional bodies to take a greater lead in setting and enforcing clear professional standards around the facilitation and promotion of tax avoidance.

According to the Purpose of the Principles and Standards section of the Code:

“PCRT applies to all members providing advice on UK tax matters regardless of, contracts of employment, membership of other professional organisations or where in the world they work and reside”.

Moreover, in relation to: “Advising on tax planning arrangements”, section 3.2 of the PCRT notes:

“Members must not create, encourage or promote tax planning arrangements or structures that: i) set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation; and/or ii) are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.”

In sum, if members of professional bodies are involved with what is effectively tax avoidance, then action should be taken in accordance with PCRT. TaxWatch has submitted evidence to ICAEW about Gateway Outsource Solutions Limited and Mr Ruocco for review and possible investigation following HRMC’s decision to list the company. We hope that ICAEW will review the evidence provided to them and take the necessary action. We look forward to seeing evidence of the PCRT working in practice.

The Isle of Man connection

Our research also reveals that Mr. Ruocco was previously appointed as a director or designated member of the same company or Limited Liability Partnership on the same day as Mr. Douglas Alan Barrowman, Chairman of the Knox Group of companies on at least nineteen occasions. Mr. Barrowman is husband of Conservative Peer Baroness Mone who recently requested a leave of absence from the Lords “to clear her name”, amid allegations she benefited from a company she recommended for a PPE contract.² Recently, Mr. Barrowman was charged with corporate tax evasion by prosecutors in Spain.³ He denies the charges. Although it is not suggested Mr. Barrowman has been involved in the company that lies at the heart of this complaint, it is noted that Companies House records Panda Holdings Limited of Knox House, 16-18 Finch Road, Douglas, Isle Of Man, IM1 2PT as the ‘active person with significant control’ over Gateway Outsource Solutions Limited.

Incidentally, a Knox House of Finch Road, Douglas, is the headquarters of Mr Barrowman’s Knox Group of Companies, as well as the correspondence address for Braaid Limited – which Companies House records as the ‘active person of significant control’ for AML Tax (UK). Readers may recall TaxWatch’s complaint about Arthur Lancaster, the director of AML Tax (UK), to the ICAEW in March of last year. In the judgment of the Upper Tier Tax Tribunal, in the matter of Revenue and Customs v AML Tax (UK) Limited, the Court described his evidence as “seriously misleading”, “evasive” and “lacking in candor”.⁴ AML Tax (UK) was added to HMRC’s name and shame list last in January 2023, with HMRC describing a disguised remuneration scheme purportedly operated by the company. Mr. Lancaster is a director of the Knox House Trustees (UK) Limited for which the ‘active person with significant control’ is one Douglas Alan Barrowman.

Mr. Ruocco was contacted for comment by TaxWatch and confirmed he is a Chartered Accountant but was now “all but retired”. He denies that he created, encouraged or promoted any tax planning arrangements and said that Gateway Outsource Solutions Ltd does not provide any tax related services or participate in any tax schemes itself.

The HMRC website states it is possible that when HMRC learns more about such schemes it may find that information which it has published is incorrect or misleading, therefore we expect ICAEW to work with HMRC when reviewing this complaint.