Misleading Advertising: Rainbowpay Ltd t/a Rainbowpay breaks the UK advertising rules for making misleading claims and omissions for the tax arrangements offered on the website.

Together with HMRC, the CAP Compliance team has been taking market-wide action about the advertising of tax arrangements. As part of this work we published our joint Enforcement Notice - Advertising Tax Arrangement Schemes.

The Notice applies to websites which advertise a tax arrangement to UK individuals or businesses that has been challenged by HMRC. The tax arrangement advertised by Rainbowpay Ltd was challenged by HMRC and subsequently this issue was passed to the Compliance team.

Misleading Statements

The following references on the Rainbowpay website breach the Enforcement Notice because the arrangement has been challenged by HMRC:

  • “An umbrella company offers an ‘employed’ service designed for contractors and freelancers as an alternative to setting up and working through a limited company.”
  • “The umbrella company act as an intermediary between yourself and your agency and would take care of your invoices for you and ensure you are paid quickly like a full-time employee. Furthermore, you are entitled to the same benefits including pensions, insurances, holiday pay and sick pay.”
  • “Many contractors use an umbrella service for the freedom. Rainbowpay’s umbrella service allows contractors to have the freedom to choose the contracts they would like and to work on multiple assignments with different clients. Others choose to use an umbrella company to offload the administration and accountancy burden. Rainbowpay take care of the invoicing, plus any deductions such as student loans or pensions at source and pay the contractor a their salary. This means contractors do not need to pay for accountant or file a self-assessment.”

On the basis that the tax arrangement offered for umbrella payroll services on the website has been challenged by HMRC, and contractors using the scheme may not be paying the correct tax and National Insurance contributions, we consider these statements are likely to mislead consumers.


Ads for schemes under HMRC challenge may be advertised – but it is particularly important to be clear and upfront about the potential risks to customers of entering into the challenged arrangement.

HMRC investigation does not necessarily mean that a claimed tax advantage will not be upheld. It does mean, however, that there is a risk that the scheme will not successfully deliver the tax advantages claimed, which should be disclosed. Omission of the disclosure of risk of entering the scheme is a problem.

The Rainbowpay website has not laid out any of the risks of entering into their tax arrangement as laid out in the Enforcement Notice.

The CAP Compliance team contacted Rainbowpay Ltd and, in the absence of a response, took the decision on 15 November 2023 to place Rainbowpay Ltd’s company details on this section of the ASA website. These details shall remain in place until such time as Rainbowpay Ltd t/a Rainbowpay has appropriately amended the website to ensure compliance with the CAP Code.

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