HMRC has said it will pursue users and promoters of an “aggressive” tax avoidance scheme run by high flying recruitment business Anderson Group.
The scheme, uncovered by the BBC, exploits the government’s Employment Allowance, and if not stopped could deprive the Treasury of tens of millions of pounds of National Insurance payments.
Anderson Group said all of its services are fully compliant with UK tax laws. It denied it is promoting the scheme tax experts have branded “aggressive” and said it is a product being offered by one of its clients.
Anderson Group, which calls itself the UK’s “leading provider of support services to the recruitment industry” has hundreds of agencies and thousands of contractors on its books. The tax avoidance scheme works by exploiting the government’s Employment Allowance which was introduced last year. The allowance enables companies to claim £2,000 off their annual employers’ National Insurance bill and was meant to encourage small businesses to take on more workers.
In the March Budget, Chancellor George Osborne promised a tax avoidance clampdown the government hopes will claw £3.1bn back into the Treasury.
The BBC secretly recorded Anderson Group’s sales manager, Ian Moran, promoting the tax avoidance scheme to a recruitment agency. He suggested that if the recruitment agency were to set up more than 100 limited companies with a couple of workers in each of them, each company could then claim the £2,000 allowance.
By Moran’s calculations the agency’s National Insurance bill would then fall from £300,000 a year to zero.
He told the recruitment agency that 10,000 workers were now being employed through these companies, and the goal was to increase that to 20,000.
If National Insurance was avoided on every worker, HMRC could lose £20m in National Insurance contributions.
HMRC has promised to ‘pursue users and promoters’ of the tax avoidance scheme.
