Anderson Group tax scheme has been uncovered
Anderson Group says that all of its services are fully compliant with UK tax laws however experts say it is exploiting the government's Employment Allowance and could deprive the Treasury of tens of millions of pounds of National Insurance payments.
Anderson Group denies promoting the scheme and says it is a product being offered by one of its clients.
The BBC launched an investigation and has secret recordings of sales manager, Ian Moran, promoting the tax avoidance scheme to a recruitment agency.
The agency he was pitching to employs 300 workers, many of whom work in warehouses or as labourers.
Robin Williamson, head of the low incomes tax reform group at the Chartered Institute of Taxation, has called the scheme "highly aggressive" and "abusive".
With further investigation the BBC found on the company’s house website more than two thousand limited companies created by those behind the tax avoidance 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.
Murphy believes it's time to consider whether there should be a penalty on the directors of limited companies set up for the purposes of abusing the tax system.
None of the tax experts the BBC spoke to were surprised that this scheme was operating within the recruitment industry.
The BBC states that & lsquo;for years this sector has been dogged by allegations of tax avoidance and exploitation of low paid workers. The Treasury is consulting on ways to clean up the sector's shady practices.’