The Guardian have reported that an ‘aggressive tax avoidance scheme’ used by recruitment agencies supplying low-paid workers to a number of high street names, is being liquidated. The move could prevent HM Revenue and Customs from recouping millions of pounds. According to the paper, the scheme promoted by Anderson Group, worked by setting up thousands of tiny firms to exploit VAT and national insurance rules that were originally designed to help very small businesses. Each mini company appears to only have a Philippines-based director and barely any retained assets. The closure of parts of the scheme followed Anderson being asked by HMRC’s fraud and investigation service for details about the large numbers of VAT registration applications made on behalf of Anderson clients last year.
Speaking to The Recruiter, for whom Anderson has been headline sponsor at their awards since 2014, the company says the Guardian story is “factually incorrect, and we refute the allegations contained in it.” However, there is no clarification as to whether the liquidations are being carried out.
The case has attracted comment from the Freelancer & Contractor Services Association who are the REC’s endorsed compliance organisation: "We are not surprised that such a scheme has been shut down, in a move that provides some much-needed clarity to the market,” said Julia Kermode, chief executive of FCSA. “From time to time we receive enquiries from firms concerned about whether it is appropriate for company directors to be based in the Philippines, and now that we see the 2000 mini-companies being liquidated this suggests that the model might not work in practice. As is often the case the end-clients, mainly large corporates in this case, were not aware of the arrangements which might also prompt the government to take some action that requires hiring firms to take more responsibility for understanding the practices and processes that take place throughout their supply chain."