How could that have happened? How could HMRC have reached the point where it cannot chase that much tax? How limited are resources is this is the case?
By Richard Murphy, founder of the Tax Justice Network
“A TEMPORARY employment agency has gone into liquidation owing HM Revenue & Customs (HMRC) £58 million in unpaid tax.
“Edinburgh-based Employ-E, a division of Legitas Group which is also in liquidation, is owned by lawyer David Allen, who is reported to own a golf course and mansion house in the Borders.
“Employ-E had about 60,000 low-paid temporary workers on its books, who it supplied to recruitment agencies throughout the UK.”
The real question here is, how could that have happened? How could HMRC have reached the point where it cannot chase that much tax? How limited are resources is this is the case?
There is also another question, which is, of course, where is the money? An agency should have been reimbursed all costs including tax. How could it lose that much money?
In the case of both questions surely HMRC should have been on top of this? If not I can only put it down to under-resourcing.
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71 Responses to “How can a company go bust owing £58 million in tax?”
LB
As Legal-E does the payroll for 15,000 workers every week it could be helping avoid tens of millions of pounds in tax a year for big agencies like HR GO, Gap Personnel and Jark.
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Obviously, I’m not the illiterate one. That’s a direct quote.
Alec
Honestly, just how thick are you? It says no such thing.
~alec
LB
http://blogs.mirror.co.uk/investigations/2011/08/we-put-legal-es-tax-dodge-for.html
Bosses are claiming hard-earned tax breaks for many of Britain’s lowest-paid workers – then pocketing the lion’s share.
They include warehouse staff for firms like Tesco and housing maintenance workers on council contracts who are all getting their payslips from an outfit called Legal-E. Here’s how it works.
Temporary workers who travel to different jobs are allowed to claim extra travel and food costs against tax at the end of the year.
Or, specialist payroll firm Legal-E, known as an “umbrella” company, does it for them – greatly reducing the amount they pay HM Revenue and Customs in income tax and National Insurance.
Legal-E explains it to workers like this: “From the savings made in the tax and NI payments, Legal-E puts some of this money back into the workers’ pay to make them better off.”
The key words here are “some of”.
We’ve seen a Legal-E presentation, which shows that a worker on £6 an hour could bank an extra £3.24 from a 40-hour week by avoiding tax on £67 of “legitimately incurred” expenses.
But the big winner is the employment agency that hired them, which saves £33.83 a week in employers’ National Insurance and holiday pay.
Legal-E does nicely too, getting £7.68 in fees. The big loser is HM Revenue and Customs – ie all of us – which gets £44.75 less tax.
As Legal-E does the payroll for 15,000 workers every week it could be helping avoid tens of millions of pounds in tax a year for big agencies like HR GO, Gap Personnel and Jark.
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Since you can’t click on a link
Read the last paragraph Its the quote provided for the 15,000 workers.
Alec
You must be the ffickest person I ever have encountered since that last time I encountered you.
You say these 15,000 workers have received money they should have paid in tax. They haven’t.
~alec
Alec
It he imply it was debt, you compounded it by saying “all due to HMRC telling the company that what they are doing is wrong and claiming all the tax that the company did not pass on” which strikes simply as a rephrasing of his assessment.
If it had been a lesser figure, or if Employ-E and related companies hadn’t had a track record of – at the very least – sharp practice, then I would have been amenable to seeing it as an oversight. As such, I’m more inclined to see it as deliberate.
As for your assessment of Murphy’s piece as an extreme attack on the people who pay his wages, it’s one the mildest attacks I’ve seen of late. Plus the idea that one should be overly deferential and uncritical to one’s employer runs contrary to IR and the concept of whistleblowing.
~alec