Fraud claims over Scottish ‘mini-umbrella’ firms with directors in Philippines
02 Jun 2021

Hundreds of tiny companies based in Scotland and with directors in the Philippines have been reported to police over concerns about an alleged multimillion pound tax fraud scheme.

New research estimates that about 600 “mini-umbrella” companies have been set up to take advantage of the employment allowance, which was designed to encourage small firms to take on more workers.

Significant clusters of companies with hallmarks of the scam have been identified at industrial estates and residential addresses across Scotland. At least 232 have been found at a single address in Kirkcaldy, Fife, while 122 were identified at a house in Lochgilphead, Argyll, and 21 at a property in Stirling.

Detectives are examining the companies and have conducted preliminary interviews with the experts who spotted the irregularities.

The employment allowance tax break, which was set up by George Osborne in 2013 when he was chancellor, permits an annual discount of £4,000 per company on national insurance contributions. Questions have been asked by tax experts about the strength of HMRC’s regulation after it was reported that some mini-umbrella companies in England employed NHS Test and Trace and testing centre workers.

Michelle Thomson, the SNP MSP and founder of the consultancy Momentous Change, said such companies could pose a risk to Scotland’s “strong global reputation” for business.

“It has become increasingly clear that lax governance and regulation by Westminster has the potential to diminish this reputation.” She said such companies had the potential to defraud the public purse and it “appears their use has spread to Scotland.”

Thomson will raise the issue with Scottish ministers and ask whether UK officials have made them aware of the issues with such companies.

Last month, the BBC and The Guardian alleged that workers at coronavirus testing sites, call centres, mobile testing units and laboratories were among those being employed by tiny firms.

Workers said they were unaware of the arrangement, having been hired by recruitment agencies, but they reported being shunted between mini companies every few months and receiving multiple P45 notices while working.

By Kieran Andrews, The Times, 2 June 2021

Read more at The Times

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