The Insolvency Service has warned companies involved in tax umbrella schemes that those companies that adopt unscrupulous business practices will be investigated and closed down.

The warning came after an investigation by the Insolvency Service that led to two companies — Sunday Solutions, registered in Bristol, and Bradbury & Co, registered in Folkestone — being ordered into liquidation on grounds of the public interest. 

Investigations supervisor Chris Mayhew says: “The action taken in this matter sends a clear message: if you run a company that adopts unscrupulous business practices, we will investigate and where necessary take action to close you down.”

“Anyone considering using an umbrella tax scheme needs to be confident that they are using a reputable company.”

The investigation found that each company was involved in a tax umbrella scheme called the Sunday Solutions Scheme, for self-employed consultants.

According to the Insolvency Service: “Company investigations found the scheme was marketed to prospective clients, mostly IT consultants, as a partnership whereby their tax liabilities would be deducted from the income collected for them and then be retained in a partnership bank account to pay their taxes when due.

“An estimated £80m was handled by the scheme but many of the 1,500 consultants who used the service did not have their tax liabilities paid and remain liable for the unpaid tax.”