BBC provides information about tax avoidance to HMRC
The government’s Employment Allowance is the latest area to be targeted by an aggressive tax avoidance scheme, according to the BBC. One of the leading lights of the recruitment industry, Anderson Group, has been accused of pushing an avoidance scheme which experts believe constitutes an ‘abuse’ of the system. There are fears that this scheme could see the Treasury losing out on tens of millions of pounds in National Insurance payments.
For their part, the company are unrepentant, claiming that the recommendations that they are making are compliant with all relevant UK tax laws. They are happy to confirm that they are promoting the scheme that the BBC has drawn attention to, and are happy to offer such a product to their clients. As one of the UK’s largest provider of support services used by the recruitment industry, there are hundreds of agencies and thousands of contractors on their books.
The scheme in question is one that works on the basis of the exploitation of the Employment Allowance that the government introduced last year. The allowance enables companies to claim a deduction from their annual employers’ National Insurance bill of £2,000 per year, and was designed to encourage businesses to take on more employees.
However, in a secret recording made of a pitch by an employee of Anderson Group to a recruitment agency, it appears that the representative was encouraging the agency to set up limited companies to employ some of the 300 workers on their books and therefore claim the allowance for each company. The purpose of this move was specifically to reduce the agency’s National Insurance bill from around £300,000 a year to zero.
The purpose of this recommendation appeared to be to avoid paying National Insurance all together, and although the representative admitted that this was not strictly the purpose of the Employment Allowance, he believes that their recommendations fall within the rules.
Robin Williamson of the Low Incomes Tax Reform Group at the Chartered Institute of Taxation believes that the scheme is ‘highly aggressive’ and ‘abusive’. He says that the legislation concerning the allowance makes it clear that it is not available to companies which are set up artificially. Jennie Granger, the head of compliance at HMRC, told the BBC that a scheme along these lines will not work and reminded all who might be tempted that fines of up to £1 million can be slapped on those who fail to disclose their use of them.
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