KC-approved ‘mini umbrella’ costs taxpayers £50m
New information has come to light regarding a tax avoidance scheme which was allegedly approved by a KC barrister and is said to have avoided £50m worth of UK tax as a non-compliant mini umbrella company.
As reported by founder of Tax Policy Associates, Dan Neidle, a contracting group in the construction sector, Anderson Group, formed at least 10,000 UK limited companies operating as mini umbrella companies – a mechanism formed with the sole aim of avoiding tax.
Typically, criminals create hundreds of umbrella companies (known as mini umbrella companies) employing a small number of temporary workers through each. In creating multiple umbrella companies rather than engaging workers through one larger organisation, the company fraudulently claims tax reliefs only available to genuine small businesses.
Of the 10,000 mini umbrella companies formed by Anderson Group, each was acquired by a different individual living in the Philippines, who also became the sole director. More information can be found here.
Julia Kermode, CEO of umbrella company compliance specialist, PayePass, commented: “These latest reports are shocking and frankly there’s still not nearly enough awareness about the perils of mini umbrella companies.
“What’s really worrying is how easily this tax avoidance scheme got away with it for so long, not to mention that it was apparently approved by a KC barrister. Many different failed tax schemes have relied on KC opinion, which perhaps should be a red flag in itself.
“This story is just the tip of the iceberg, though. Mini umbrella companies see hundreds of millions, if not billions, slip through the cracks and workers generally have no idea anything is amiss.
“On top of the astonishing amount of tax avoided, these immoral schemes continue to tarnish the reputation of the entire umbrella industry which the government continues to drag its heels with regard to regulating.”