Everything you need to know about mini umbrella fraud

Are you aware of the different types of umbrella company scams?

Well, here’s one to keep in mind – it’s called mini umbrella company fraud. Carry on reading for details about what they are, why they’re dangerous and how to spot them

What is the mini umbrella company scam? 

This scam is being carried out by organsied criminals who create multiple limited companies to enable fraud. Each one only has a small number of temporary workers employed.

A promoter business facilitates the structuring of the mini umbrella companies, sometimes recognised as outsourcing business. Other businesses may also be linked and involved in the supply chain to support the operation. 

Mini umbrella companies reduce tax payments to HMRC when paying temporary workers. This includes National Insurance, VAT and PAYE. 

Why are mini umbrella companies dangerous for agencies? 

HMRC warns all businesses in the temporary worker industry about the dangers of this fraud. 

Is it your responsibility as an agency to know who is paying your candidates and ensure that they are compliant. 

Having a mini umbrella company in your supply chain may cause reputational, financial and legal damage to your recruitment agency as well as your candidates. 

How to spot mini umbrella companies? 

Mini umbrella companies are usually low down in the supply chain so it may be difficult to recognise them but here some general signs:

• The employer of the worker is not the umbrella company that you have a contract with
• Workers don’t know who their employer is and are regularly moved between mini umbrella companies to maximise profits from the fraud
• Multiple companies being created around the same time with unusual or similar company names 
• Directors are usually foreign nationals 
• The companies have short lifespans of under 18 months

The team at Mint is here if you have any questions concerning umbrella company scams and fraud. 

Remember, we are an accredited umbrella company – so get in touch now via [email protected] if you would like to work with us!