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Recruitment firm accused of using ‘aggressive’ tax avoidance scheme

Recruitment umbrella firm Anderson Group has been accused of using an “aggressive” and “abusive” tax avoidance scheme in a report by the BBC.

According to a report on the BBC’s Today programme, the firm uses the government’s Employment Allowance scheme to get around paying National Insurance.

The allowance lets companies claim £2,000 off their National Insurance bill and was designed to encourage small businesses to employ more people.

However, by setting up limited companies with only a few workers each small limited company can then claim the £2,000 allowance.

The BBC claimed it had secretly recorded Anderson Group sales manager Ian Moran promoting the scheme to a recruitment agency, allegedly saying its National Insurance bill would fall from £300,000 a year to zero.

Speaking to the BBC, HMRC director general, enforcement and compliance Jennie Granger said: ”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 £1 million.”

Technical director of the low income tax reform group at the Chartered Institute of Taxation Robin Williamson said the scheme was “highly aggressive” and “abusive”.

Responding to the news, trade association the Freelancer and Contractor Services Association's CEO Julia Kermode said she was “very concerned to hear about such poor practice”.

She added: “The government’s Employment Allowance scheme was clearly developed with the intention of supporting small businesses and recognising their important contribution to the economy, not to facilitate profiteering by unscrupulous providers.

“I would like to use this opportunity to redress the balance, as the vast majority of employment service providers do not operate in this way, and should not be tarnished with the same brush.”

Anderson Group told the BBC its practices are compliant with UK tax law and that the BBC was "totally incorrect" to say it was promoting the scheme, instead claiming it was a product being offered by one of its clients.