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Government urged to slash number of tax relief schemes Government urged to slash number of tax relief schemes
(34 minutes later)
The government has been urged to slash the number of tax relief schemes it offers after it emerged that a leading company in the recruitment industry is encouraging clients to exploit a vehicle intended to encourage small businesses to hire more employees.The government has been urged to slash the number of tax relief schemes it offers after it emerged that a leading company in the recruitment industry is encouraging clients to exploit a vehicle intended to encourage small businesses to hire more employees.
Anderson Group is encouraging firms to set up lots of small companies to hire a small number of workers so that each company can claim the employment allowance, according to a BBC investigation.Anderson Group is encouraging firms to set up lots of small companies to hire a small number of workers so that each company can claim the employment allowance, according to a BBC investigation.
The scheme, which the group denies promoting, saying it was a product being offered by one of its clients, is not illegal but it has once more illustrated how potential public funds are being lost to tax avoidance. The scheme – which the group denies promoting, saying it was a product being offered by one of its clients – is not illegal but it has once more illustrated how potential public funds are being lost to tax avoidance.
Margaret Hodge, a former chair of the parliamentary public accounts committee, said on Friday: “I have seen lots of similar schemes. What happens is the government introduces a whole range of tax reliefs to encourage the economy … then that’s misused by companies and advisors for no other purpose than to avoid tax.” Margaret Hodge, a former chair of the parliamentary public accounts committee, said on Friday: “I have seen lots of similar schemes. What happens is the government introduces a whole range of tax reliefs to encourage the economy … then that’s misused by companies and advisers for no other purpose than to avoid tax.”
She told the BBC there were more than 1,100 tax reliefs, too many for HMRevenue & Customs to monitor properly. “You need to have a simplified system where you don’t have a whole range of tax reliefs,” she said.She told the BBC there were more than 1,100 tax reliefs, too many for HMRevenue & Customs to monitor properly. “You need to have a simplified system where you don’t have a whole range of tax reliefs,” she said.
The BBC secretly recorded Anderson Group’s sales manager, Ian Moran, promoting the scheme to an unnamed recruitment agency. He told the agency that if it set up more than 100 limited companies with a couple of workers in each of them, then each company could claim the £2,000 employment allowance with respect to its employees.The BBC secretly recorded Anderson Group’s sales manager, Ian Moran, promoting the scheme to an unnamed recruitment agency. He told the agency that if it set up more than 100 limited companies with a couple of workers in each of them, then each company could claim the £2,000 employment allowance with respect to its employees.
Moran suggested that the the money the agency saved could be spent on “some great ski holidays, couple of Bentleys. Job’s a good ‘un.”Moran suggested that the the money the agency saved could be spent on “some great ski holidays, couple of Bentleys. Job’s a good ‘un.”
He told the agency that 10,000 workers were already being employed through such companies and that the goal was to double that total. The effect could be to deprive the Treasury tens of millions of pounds of national insurance contributions. He told the agency that 10,000 workers were already being employed through such companies and that the goal was to double that total. The effect could be to deprive the Treasury of tens of millions of pounds of national insurance contributions.
Moran said of the employment allowance: ”It wasn’t intended to be used exactly like this, let’s be straight. But they set the rules, we’ll build a product.” Moran said of the employment allowance: “It wasn’t intended to be used exactly like this, let’s be straight. But they set the rules, we’ll build a product.”
Jennie Granger, head of compliance at HMRC, told the BBC: “Schemes like this don’t work and anyone thinking of using it should think again.” She added that failing to disclose an attempted tax avoidance scheme was punishable by a fine of up to £1m.Jennie Granger, head of compliance at HMRC, told the BBC: “Schemes like this don’t work and anyone thinking of using it should think again.” She added that failing to disclose an attempted tax avoidance scheme was punishable by a fine of up to £1m.