FCSA has issued further advice and an update about the fraudulent activity of cloning real companies and using these clones to defraud recruitment and employment businesses, workers and even HM Revenue & Customs.

FCSA has 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,” the FCSA said to illustrate how the scam works.

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,” the FCSA said. “As such the worker’s personal tax account is never credited with the monies actually due, potentially doing great harm to them.”

The FCSA went on to say: “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 £1m through unremitted NICs [National Insurance Contributions] and tax deductions, and it is likely than many individual workers face shortfalls in their expected NICs and income tax contributions.”

FCSA said it continues to pursue the perpetrator by civil means pending the authorities acting 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 the Recruitment & Employment Confederation, The Employment Agents’ Movement and the Association of Professional Staffing Companies of our findings and we’d recommend that their members also check with them before changing supplier details.”

FCSA CEO Chris Bryce said: “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 off companies which are so obviously clones.”

[EDITOR’S NOTE: Recruiter’s 2021 Special Report on cloning and other scam issues within the umbrella industry recently was recognised in the 2022 Trade, Association and Business Publications International TABBIE Awards with an honourable mention in the Special Reports category. Recruiter came in 7th overall globally in the 2022 Tabbies’ Top 25 Single Issue category.]

• Comment below on this story. Or let us know what you think by emailing us at [email protected] or tweet us to tell us your thoughts or share this story with a friend.