How temporary recruitment agencies use an aggressive tax avoidance scheme which deprives taxpayers of 'hundreds of millions' of pounds each year

one company with

two employees

1,000 workers in 500 companies

1,000 workers in one company

Agency

Warehouse

Warehouse

... while claiming 500 lots of the employment allowance. Instead of £3,000, the agency will make £1.5m, but that is not all ...

the employment agency can still supply the warehouse with its workers ...

... the single workforce is instead split into 500 companies, each employing two people

As the employer, the agency can claim a one-off £3,000 employment allowance every year. This is a subsidy which was designed to take very small businesses out of paying employer’s national insurance. However ...

Agency employs 1,000 temporary workers and supplies them to a warehouse

These 500 small businesses can also charge VAT at 20%, but pay it back to the government at 12% or lower, generating an additional windfall

one company with

two employees

1,000 workers in 500 companies

1,000 workers in one company

Agency

Warehouse

Warehouse

These 500 small businesses can also charge VAT at 20%, but pay it back to the government at 12% or lower, generating an additional windfall

... while claiming 500 lots of the employment allowance. Instead of £3,000, the agency will make £1.5m, but that is not all ...

the employment agency can still supply the warehouse with its workers ...

... the single workforce is instead split into 500 companies, each employing two people

As the employer, the agency can claim a one-off £3,000 employment allowance every year. This is a subsidy which was designed to take very small businesses out of paying employer’s national insurance. However ...

Agency employs 1,000 temporary workers and supplies them to a warehouse