In an investigation, the BBC said Anderson Group – which calls itself the UK’s “leading provider of support services to the recruitment industry” – is depriving the UK Treasury of “tens of millions of pounds in National Insurance payments”. It has been exploiting the government’s Employment Allowance, which was introduced last year.
The allowance allows eligible businesses to reduce National Insurance bills by up to £2,000.
Anderson Group denied any wrongdoing, and said its services were fully compliant with UK tax laws. It added that it was “totally incorrect” to say that the company was promoting the scheme, and is simply a product being offered by one of its clients.
The BBC said it had secretly recorded the company’s sales manager, Ian Moran, promoting the tax avoidance scheme to a recruitment agency. It employed 300 workers, many of whom were working low-paid jobs in warehouses. Moran had suggested that if the recruitment agency were to set up over 100 limited companies with a few workers in each of them, each company could claim the £2,000 allowance.
Moran’s suggestions would mean the agency’s National Insurance bill would then fall from £300,000 a year to zero. The BBC reported that Moran then suggested the recruitment company – which didn’t intend to use the scheme – might like to spend the £300,000 “on Bentleys and ski chalets”. It recorded him saying, the “job’s a good’un”.
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The recorded meeting also had Moran admitting that the Employment Allowance was being abused. “It wasn’t intended to be used exactly like this… but they set the rules, we’ll build a product,” it was reported to include.
The sales manager had told the recruitment agency that 10,000 workers were being employed through these companies and the aim was to increase that to 20,000. If National Insurance was avoided on every single worker, HMRC could lost £20m in National Insurance contributions.
HMRC head of compliance, Jennie Granger, said that they promised to pursue users and promoters of the idea. “Schemes like this don’t work and anyone thinking of using it should think again. Failing to disclose an attempted avoidance scheme is punishable by a fine of up to £1m,” she said.
The Employment Allowance outlined that artificially created companies cannot claim the £2,000, though the BBC said it had found more than 2,000 limited companies on the Companies House website, created by those behind the tax avoidance scheme.
Robin Williamson, from the Chartered Institute of Taxation, told the BBC: “To use the colloquial – they are having a laugh.” He called the scheme both “highly aggressive” and “abusive”.