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Mini Umbrella Companies – More to This?

Mini Umbrella Companies – More to This?

The BBC reports: More than 40,000 people from the Philippines have been recruited to front British companies as part of schemes costing the UK “hundreds of millions of pounds” in lost taxes. BBC Radio 4’s File on 4 discovered more than 48,000 of these companies have been created in the past five years.  It works by exploiting the government’s Employment Allowance – an annual discount of £4,000 per company on National Insurance contributions. The allowance was meant to encourage companies to take on more workers. However, recruitment agencies exploit the allowance by employing temporary workers through a series of mini umbrella companies – or “MUCs”.  The companies are originally incorporated with a British director recruited via private groups on Facebook. They resign as directors after a short period of time and a Filipino director is appointed in their place – to read more.

Whether the practice is restricted to Filipino directors is not known but why would it be?  In possession of a company trading style would this asset also be used for other nefarious activities, such as insurance claims?

We have long had concerns about the number of Companies abusing the Limited Liability status:

  • set up the trading style for less than £100,
  • enjoy the benefits of the ‘limited liability’ status – fall back on this in the event of adverse activity during their ‘trading’
  • claim not to have traded or
  • ignore requests to submit records and are struck off …. only to start again under a new trading style
  • do not submit accounts or pay tax or

10/2020, after a brief exchange with Companies House following the reported ‘Reforms to Companies House to clamp down on fraud and give businesses greater confidence in transactions‘ it became evident our concerns were falling on deaf ears. Our last (unanswered) can be found here.

In the meantime, we urge all insurers (and other dealing with Companies House) to undertake some basic free due diligence utilising what is available, for example: Companies House.