Mini umbrella companies (MUC) were introduced into the marketplace in 2020 and have already come to the attention of HMRC.
In the mini umbrella company arrangement, multiple small limited companies are created and only a small number of temporary workers are assigned (employed) to each one. This allows the overall organisation to benefit from the fraud by either not paying, or reducing PAYE, National Insurance and VAT. We’re not talking about three or four small limited companies – not at all. HMRC state that “hundreds or thousands of small limited companies set up solely to enable the fraud.”
How to spot a mini umbrella company (MUC)
In the HMRC stakeholder announcement, they list 5 things to look out for that might help you identify a mini umbrella company:
Strange name – Many companies are likely to have been created at the same time, with unusual addresses that may be unsuitable for their operations.
Inaccurate descriptions – Obviously mini umbrella companies won’t describe their business activity as “helping people avoid paying tax”. However, have a look on Companies House if you have any concerns and see what they’re official business description is.
Foreign nationals are captaining the ship – Commonly, the Directors of mini umbrella companies are located abroad.
High worker turnover – Workers are frequently move between different employers.
Not around for long – Mini umbrella companies are unlikely to have been around for long. In fact, they have probably been around for under 18 months and then they’ll allow themselves to be dissolved by Companies House because they haven’t met their professional obligations (filing).
If any Outside Spy members believe they are employed by a mini umbrella company please contact us via the website.