60,000 temporary workers affected by the exploitative application of the tax avoidance scheme

by Tony Boorman on June 28, 2013

HMRC_

I’m back on my soap box with that old favourite; Mobile Worker Scheme and other notable tax avoidance schemes.

I’ve been a little quiet during the past year, mainly because we have been so busy and many other notable speakers have continued to carry the mantel. However, following the news that the HMRC have slapped a huge tax and penalties bill of £58m upon a company for unpaid taxes and fines, resulting in them going into liquidation, I found myself excited about writing a blog again…which doesn’t happen often!

Well nobody likes to be wrong and after sticking my neck out with the message that “I don’t care what anyone says, but the application of the mobile worker scheme is both exploitive and illegal”, the news resonates well with me.

Employ-E – formally known as Legal-E – who employed up to 60,000 temporary workers who were supplied to recruitment companies, was described as a management service for recruitment agencies whose workers fall under AWR regulation. I’m not going to go too deep here because I’m sure that I could write at least half a dozen blogs around the scandal of this topic!

So 60,000 temporary workers, according to Employ-E, are “maximising their earnings by offsetting legitimate expense against gross pay”!?  Well, the truth of the matter is that these workers paid at or close to NMW are certainly not “maximising” their earnings because Employ-E hit them with a huge administration charge. With regards to claims of “legitimate”, well perhaps you should talk to one of those temporary workers or look at their payslip. Ignorance is no excuse pops to mind.

Anyway, those sponsors of the mobile worker scheme or cynics out there will probably try and tell you that the HMRC don’t really know what they are doing – however the owner of Employ-E also owned an outsourced payroll service provider called Legitas Group Limited which went into voluntary liquidation a few weeks ago.  I wonder why!?

I really must bring this to a close but I’ll leave you with a few points to consider:

  1. What is going to happen to those 60,000 workers’ holiday pay?
  2. Who is going to fight the corner for those 60,000 lower paid vulnerable workers?
  3. Considering both companies have gone into liquidation, I guess the HMRC will seek ‘debt transfer’ and now target those recruitment agencies and their end hirers who employed the 60,000 temporary workers. Yes, this is where it begins to hit home and resonate.
  4. What would you do if you had a partner within your supply chain that operates unethically, illegally and jeopardises your brand and reputation?
  5. How much do you really need to pay to avoid risk?

Tony Boorman

Tony Boorman is the Director of Recruitment for Stafforce. Having started his career in the Food Manufacturing Industry supplying multiples, Tony then moved into recruitment in 1997, starting out as an industrial consultant. He has since moved into large scale, onsite food manufacturing, managing onsite and delivery teams across the UK.

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