Freelancer and Contractor Services Association (FCSA) has today issued a further warning and an update about the fraudulent activity of cloning real companies and using these clones to defraud recruitment and employment businesses, workers and even HMRC.
FCSA have been investigating serious infringement activity surrounding cloned companies. This activity involves the creation of a registered company with a nearly identical name to a real company, for example a real business called Harrison MacMichael Umbrella Services Ltd may be cloned as Harrison McMichael Umbrella Company Ltd.
This clone then uses carefully prepared documentation – often exact copies of the real company’s documentation and branding, to persuade employment businesses – customers of the real company – to remit monies to the cloned company’s bank account and even supplying new contractors to them.
It is extremely likely that payments received by the cloned company, which include money for employment costs such as NICs, income tax and apprenticeship levy is never remitted to HMRC. As such the worker’s personal tax account is never credited with the monies actually due, potentially doing great harm to them.
We now have amassed substantial independent evidence of this activity and some weeks ago we supplied this information to the Police, Action Fraud and to numerous departments within government itself, including HMRC. Unfortunately, the cloning activity continues and, to date, we have not been made aware of any action being taken by the authorities. We believe that the fraudulent activities have so far deprived the Exchequer of well in excess of £1 million through unremitted NICs and tax deductions and it is likely than many individual workers face shortfalls in their expected NICs and income tax contributions.
FCSA continues to pursue the perpetrator by civil means pending the authorities taking action and, in the meantime, we urge employment businesses and contractors to ensure that the companies they are doing business with are the real thing by double-checking with Companies House or, for FCSA members, on the FCSA website. Employment businesses should take great care to ensure that any requests to change destination bank accounts from an umbrella or accountant are legitimate and pay careful attention to company registered numbers and names. We have informed trade bodies such as REC, TEAM and APSCo of our findings and we’d recommend that their members also check with them before changing supplier details.
Chris Bryce, FCSA’s Chief Executive says, “This form of corporate ID theft is all too easy, and the damage it does to all the parties involved is substantial and lasting. I urge the authorities to take immediate action to bring this criminal activity to an end. I’d also urge government to give the Registrar of Companies the power to quickly and without delay strike of companies which are so obviously clones.”