BBC investigation exposes mini umbrella company fraud
Philip Fisher analyses an investigation by BBC's File on 4 that has identified potential losses to be Exchequer of billions of pounds.
You might also be interested in
Replies (12)
Please login or register to join the discussion.
I didn't watch this, but it's entirely unsurprising to any professional accountant or anyone who reads the forum comments here re lack of basic CH & HMRC checks (the list is almost endless: dodgy R&D claims, SBP, BBLs etc.) creating a fraudsters' charter i.e. what's new?
The obvious reason is that unlike the private sector, with a few exceptions (dedicated NHS staff, teachers etc.) in the public sector generally there are precious few incentives to do a good job or to get rid of incompetent/under-performing people: https://www.icaew.com/insights/tax-news/2021/may-2021/icaew-urges-hmrc-t...
Why do the words pot and kettle spring to mind?
Should the BBC not be paying some of their regular contributors as employees, and hand over the relevant amount of NI to HMRC?
https://www.accountingweb.co.uk/any-answers/fancy-that-an-ea-fraud-duste...
The mirror had this story 4 years ago
Nobody noticed
While I am certain that an investigation will be launched and action taken, we already know that :-
1. No blame whatsoever will be found with the NHS - heroes to a man, God bless them etc
2. No fault will be found with G4s
3. HR Go may or may not be thrown to the wolves
4. The "promoters" will be roundly condemned but no recourse available as offshore, unidentifiable, Not even sure anything actually illegal occurred
5. Numerous patsies/straw (wo)men actually resident in the UK will have the book thrown at them and hell mend 'em. G4s might actually be paid to incarcerate them.
HMRC have been reporting on this particular issue for many months. Their December PAYE bulletin, for example, set out things to look out for, mentioned that many thousands of such fraud attempts had been blocked and that arrests had been made in November following investigations (that presumably were on-going for many months before that).
Didn't watch this but thanks, great article. Surely this would be caught by the blanket GAAR legislation if nothing else. Beggars belief that such what appears to be blatant bending of the rules for such large amounts of tax in total would not be vigorously investigated.
One very simple solution to this fraud.
Cut out all the middle men, and have the public sector pay public sector staff on a good old fashioned temp payroll.
Of course that means all those with their noses in the trough would get nothing, so it wont happen.
If the Chancellor combined NI with income tax then there would be less incentive for people to think up these schemes. HMRC would then not have to waste £millions sorting out the ensuing mess. If the NHS has contracted with G4S for staff, then G4S should be responsible for all the activities of the subcontractors it uses to fulfill the contract (particularly overseas). I think the GAAR legislation could be used for this purpose. We shall wait and see ...
HMRC has known about this for years, and has taken lots of action, but taxpayers' affairs are rightly private unless they are accused of a crime. The story will not be news to the Treasury or HMRC. The big promoters will have taken steps to ensure that everything is done in accordance with the law so that there is no question of fraud. Many contractors don't read what they're signing, they just want to work, so it's doubtful any of those surprised by the name on their payslip had not signed up to it. So the argument becomes about whether it constitutes unacceptable avoidance. The fact that the GAAR Panel hasn't condemned it tells its own story, doesn't it? Or maybe there are, even now, just too many government departments and state organs like the Beeb using contractors supplied through PSC and MUCs?
Indeed. It's easy to sensationalise such stories and make out HMRC are not doing anything and that it's the journalist that has 'uncovered' what is going on but this is a bit unfair on HMRC.
"It could be billions" says Jolyon Maugham the champion of tax justice and Boxing Day fox bashing but HMRC estimate that the entire cost of all NIC allowance is £2.5bn a year so that's unlikely.
BBC Radio 4's File on 4 is always worth a listen imho - best accompanied with some alcohol to fortify oneself as you learn what other people are capable of doing to others/the environment etc :(