HMRC has published an official fraud warning about so-called “Bills of Exchange” being marketed as a way to wipe out tax debts — and it’s targeting workers and businesses in the recruitment sector. The issue briefing, published on 13 May 2026, confirms that HMRC doesn’t accept these instruments as payment of any tax liability.
What the figures show:
- HMRC has seen a rise in customers trying to use these instruments to settle tax debts
- Promoters are particularly active in the recruitment and temporary labour sector, where organised crime groups also operate
- A company was recently wound up after courts confirmed these instruments weren’t valid payment to HMRC
- Approximately 30,000 recruitment agencies, 400 umbrella companies, and 700,000 workers fall within scope of new joint and several liability rules from April 2026
How the Bills of Exchange scam works
A Bill of Exchange is defined in the Bills of Exchange Act 1882 as a written note from one person to another, requiring payment of a specific sum. Here’s the catch: the recipient has no legal obligation to accept it. HMRC doesn’t, and never has.
Promoters are telling businesses — mainly payroll providers and umbrella companies — that these instruments can clear their HMRC debts. Some dress the arrangement up using terms like “money orders”, “Public Trusts”, “Merchant Law”, or “Negotiable Instruments”. Others falsely claim the schemes have been approved by King’s Counsel or are accepted by HMRC. That’s simply not true.
The scheme has already been tested in court. A company was wound up after the court accepted that the instruments offered to HMRC were not valid payment.
There’s a direct link between the promoters and the umbrella sector. One director of Liberty Rock, a company pushing the scheme, is also a director of UK Pay Ltd. That umbrella company was itself subject to an HMRC winding-up petition with a hearing on 13 May 2026 — the same day the fraud warning was published.
Why the timing matters
This isn’t happening in a vacuum. Since 6 April 2026, new umbrella company PAYE joint and several liability rules have been in force. Under the new legislation, recruitment agencies and end clients can be held liable for unpaid PAYE and Class 1 NICs when an umbrella company in their supply chain fails to pay.
Some promoters are falsely claiming their Bills of Exchange arrangements can sidestep these new rules. They can’t.
Dave Chaplin, CEO of IR35 Shield, put it bluntly: “The unregulated umbrella industry has a history of dodgy tax schemes. Whilst recruiters can get attracted to the high kickbacks offered by some umbrellas, it is a fool’s game. Due to new legislation since April 2026, recruiters are effectively guarantors for the umbrellas they use, whereby any unpaid umbrella tax is the recruiters’ liability.”
Crawford Temple, CEO of Professional Passport, was equally direct: “These schemes are simply the latest ruse dressed up as clever financial planning, exploiting uncertainty around the new JSL rules in an attempt to create artificial loopholes. HMRC is already clamping down hard on disguised remuneration schemes, and anyone promoting these arrangements should be under no illusion — a Bill of Exchange does not remove tax liabilities and its misuse in these structures is unlawful.”
Consequences for anyone using the scheme
HMRC’s warning is clear on what could happen to anyone caught up in these arrangements. The consequences aren’t theoretical — enforcement action is already underway.
Users could face additional interest on unpaid tax, currently running at 8% per year. Beyond that, HMRC may pursue penalties, pass debts to collection agencies, or send officers to visit homes and business premises. In the most serious cases, insolvency and bankruptcy proceedings are on the table.
How to claim if this affects you
If you’ve been approached by a promoter offering to settle your tax bill through a Bill of Exchange, promissory note, or similar arrangement, don’t sign up. And if you’re already using one of these schemes, act quickly.
Steps to take now:
- Contact HMRC as soon as possible through the disclosure process at GOV.UK. Getting in touch early could reduce any penalties you’d otherwise face.
- Seek independent professional advice before agreeing to any arrangement that promises a tax saving. Don’t rely on the promoter’s assurance that it’s compliant.
- Report suspicious schemes anonymously using HMRC’s “report tax fraud or avoidance” online form at gov.uk/report-tax-fraud.
- If you can’t pay what you owe, HMRC can work with you to set up a Time to Pay arrangement. Bills under £30,000 can be set up online without calling HMRC.
Scams targeting taxpayers aren’t new, and they don’t always look like scams at first glance. If you’ve recently received a suspicious letter or notice about your tax, it’s worth checking whether it’s genuine — our guide on spotting fake P800 letters covers what to look for.
Key Takeaways
- HMRC published a fraud warning on 13 May 2026 confirming it doesn’t accept Bills of Exchange, promissory notes, or similar instruments as tax payment.
- Promoters are particularly active in the recruitment sector, where new joint and several liability rules now make agencies liable for unpaid umbrella company tax.
- The scheme has already failed in court — a company was wound up after offering these instruments to HMRC.
- If you’ve been approached, don’t sign up. If you’re already involved, contact HMRC through the disclosure process immediately.
- You can report suspicious tax schemes anonymously at gov.uk/report-tax-fraud.
