The FCSA calls for a government clampdown on cloned umbrella companies

The Freelancer and Contractor Services Association (FCSA) has accused the authority of providing information relating to problems with cloned umbrella companies, which it claims have spent more than £1m to date.

The The association is concerned with promoting tax and employment regulatory compliance Expanded temporary labor markets in supply chains, and provide compliance accreditation to umbrella organizations.

The FCSA issued a warning in September 2021 Regarding the issue of umbrella company clones, at least 10 umbrella companies created memberships after discovering they were victims of the practice.

The criminals aim to extort money from employment agencies and end-clients by trying to pass themselves off as reputable umbrella companies. They do this by registering a new company with Companies House that has a similar name to an existing umbrella firm, effectively creating a clone of that company.

Individuals working for these clones will then contact employment agencies and end-clients and try to pass themselves off as working for the company they are impersonating.

Typically, this contact will include a notification that the umbrella company has changed its banking details and that all future invoices should be paid into a new bank account.

If the copycat company succeeds in trying to defraud an agency or end-hire in this way, it can result in huge amounts of money being diverted, circumventing the umbrella and leaving contractors out of pocket.

In a statement, the FCSA said it had “collected substantial independent evidence” of the practice, which it had passed on to a number of government departments, including the police, cybercrime reporting hub Action Fraud and HM Revenue and Customs.

“Unfortunately, cloning activities continue and to date, we have not been informed of any action taken by the authorities,” the statement continued. “We believe the fraudulent activities have cost the exchequer more than £1m so far. [National Insurance contributions] and income tax contribution.”

As a result, the FCSA said it was continuing to pursue offenders “in civil ways” while waiting for authorities to take appropriate action.

“In the meantime, we urge employment businesses and contractors to double check that the companies they are doing business with are genuine with Companies House or, for FCSA members, on the FCSA website,” the association’s statement continued.

“Employment businesses should take great care to ensure that any request from an umbrella or accountant to change destination bank accounts is legitimate and pay careful attention to company registered numbers and names.”

Meanwhile, the association’s CEO, Chris Brice, called on authorities to act on any reports of cloned companies they receive.

“This form of corporate ID theft is very easy, and the damage it does to all parties involved is substantial and long-lasting,” he said. “I call on the authorities to take immediate action to put an end to this criminal activity. I would also urge the government to empower the Registrar of Companies to quickly and without delay wind up companies that are clearly clones.

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