HM Revenue & Customs says it will pursue the promoters and users of an “aggressive” tax avoidance scheme that could cost the Treasury “tens of millions” in lost national insurance payments.
The BBC reports the scheme offered by recruitment firm Anderson Group exploits the Government’s employment allowance, which was introduced last year.
The BBC secretly recorded the firm’s sales manager explaining to a recruitment agency how it could set up over 100 limited companies to drop the firm’s NI bill from £300,000 a year to zero.
Chartered Institute of Taxation head of the low income tax reform group Robin Williamson says the scheme is “highly aggressive” and “abusive”.
HMRC head of compliance Jennie Granger says: “Schemes like this don’t work and anyone thinking of using it should think again.
“Failing to disclose an attempted avoidance scheme is punishable by a fine of up to £1m.”
The tax office says it will pursue “users and promoters” of the scheme.
Former Public Accounts Committee chair Margaret Hodge told the BBC’s Today programme: “We have a ridiculously complex tax scheme with over 1,100 tax relief schemes. I think we should simplify the system.
“In 2010 the government said they’d simplify the tax system, but we ended up with 100 more tax relief schemes than we went in with.”
Anderson Group says it is fully compliant with UK tax laws and that is is “totally incorrect” to say the firm is promoting the scheme. It says it is a product being offered by one if its clients.