Freelancer and Contractor Services Association (FCSA) has issued a further warning and update about the fraudulent activity of cloning real companies and using these clones to defraud recruitment and employment businesses, workers and even HMRC.
The organization has been investigating serious infringement activity surrounding cloned companies. This activity involves the creation of a registered company with a nearly identical name to a real company, for example a real business called Harrison MacMichael Umbrella Services Ltd may be cloned as Harrison McMichael Umbrella Company Ltd.
This clone then uses carefully prepared documentation – often exact copies of the real company’s documentation and branding, to persuade employment businesses – customers of the real company – to remit monies to the cloned company’s bank account and even supplying new contractors to them.
It is extremely likely that payments received by the cloned company, which include money for employment costs such as NICs, income tax and apprenticeship levy is never remitted to HMRC. As such the worker’s personal tax account is never credited with the monies due, potentially doing great harm to them.
The FCSA have amassed substantial independent evidence of this activity and have supplied this information to the police, Action Fraud and to numerous departments within government itself, including HMRC. They believe that the fraudulent activities have so far deprived the Exchequer of well in excess of £1 million through unremitted NICs and tax deductions.
The FCSA are urging employment businesses and contractors to ensure that the companies they are doing business with are the real thing by double-checking with Companies House or, for FCSA members, on the FCSA website. Employment businesses should take great care to ensure that any requests to change destination bank accounts from an umbrella or accountant are legitimate and to pay careful attention to company registered numbers and names.
“This form of corporate ID theft is all too easy, and the damage it does to all the parties involved is substantial and lasting,” says Chris Bryce, FCSA’s chief executive. “I urge the authorities to take immediate action to bring this criminal activity to an end. I’d also urge government to give the Registrar of Companies the power to quickly and without delay strike of companies which are sol obviously clones.”
