UK Recruitment Industry Under Fire for Links to Tax Avoidance Schemes
A recent Sky News investigation has uncovered shocking details about how some of the UK’s biggest recruitment agencies have been linked to large-scale tax avoidance schemes, leaving thousands of workers with crippling tax bills from HMRC. Many of these workers, including contractors and agency staff, were unknowingly placed into disguised remuneration schemes, which have had devastating financial and personal consequences.
Read the full Sky News article here.
How Were Workers Affected?
Recruitment giants like Hays, Capita, and Petrofac placed workers into roles where their payroll was managed by third-party umbrella companies. These companies assured workers they were handling tax correctly but were instead paying wages as “loans” to avoid income tax and National Insurance contributions.
HMRC later deemed these loan schemes unlawful and demanded back payments—sometimes totalling six-figure sums—directly from the workers. Many people have suffered severe financial hardship, and tragically, the scandal has been linked to at least 10 suicides.
A Closer Look: Manuel Bernal’s Story
One victim, Manuel Bernal, took on a contract job through Atlantic Resourcing, part of Petrofac. His pay was handled by an umbrella company, which later changed without his consent. Like many others, Manuel had no idea he was involved in a tax avoidance scheme. Years later, HMRC hit him with a £4,000 tax bill—a relatively small amount compared to others who faced life-changing debts.
Recruitment Agencies Under Scrutiny
Although recruitment agencies did not directly manage payroll, many recommended or provided information about these umbrella companies, leading workers to believe they were compliant. As a result, the government is now introducing stricter regulations, making recruitment companies legally responsible for ensuring tax is collected correctly.
The Ongoing Fight for Justice
Thousands of workers continue to battle against these retrospective tax demands, and the government has launched an independent review of the loan charge. However, the review will not investigate the role of recruiters and umbrella companies, leaving many affected individuals feeling betrayed.
If you or someone you know has been impacted by the loan charge or is struggling financially, support is available. You can contact Samaritans at 116 123 or email jo@samaritans.org.
Read the full Sky News article here.
Drive Personnel: Ethical and Transparent Recruitment
At Drive Personnel, we believe that recruitment should be built on trust, integrity, and compliance. We are committed to ensuring that all our workers are placed in transparent, legally compliant employment arrangements, with payroll processes that are fully above board.
We work only with trusted, compliant payroll providers and carefully vet all third-party services to protect our workers from unethical and unlawful tax practices.
The wellbeing and financial security of our workers is our top priority, and we take pride in operating to the highest standards in the industry. We strongly support the move towards greater accountability for recruitment agencies and umbrella companies to prevent further harm to workers.
This scandal highlights why it is so important to work with a trusted and reputable recruitment agency. If you are looking for ethical, compliant recruitment solutions that put workers first, Drive Personnel is here to help.
For more information about our recruitment services, visit www.drivepersonnel.com.