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The BBC secretly recorded a sales manager working for Anderson Group, a prominent U.K. company in the recruitment industry. The sales manager promoted a tax avoidance scheme of dubious legality (at least), suggesting that a recruitment agency could take its 300 mostly low paid workers and transfer them to 100 shell companies, each with 3 employees, in order to try to qualify for a £2,000 tax allowance. According to Mr. Moran, the scheme would reduce the agency's £300,000 annual U.K. National Insurance tax bill to zero.

According to the same sales manager, 10,000 workers were already being employed through shell companies. The BBC confirmed that thousands of company registrations were created to support this scheme.

"Schemes like this don't work and anyone thinking of using it should think again," Jennie Granger, head of compliance at HMRC told the BBC. "Failing to disclose an attempted avoidance scheme is punishable by a fine of up to £1m," she added. HMRC has promised to "pursue users and promoters" of the scheme.

Former chair of the Public Accounts Committee Margaret Hodge pointed out that there are over 1,100 tax relief schemes in the U.K. tax code, a number that has been rising. She advocates significantly reducing this number and boosting HMRC's funding, citing the fact that every additional pound invested in HMRC yields about £9 in recovered tax. Richard Murphy, a tax expert and reform campaigner, suggests there ought to be a penalty on the directors of limited companies set up to abuse the tax system. Currently the directors are betting HMRC will have nothing to recover since the shell companies have few assets.
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