by Lamiat Sabin

THE taxman was urged yesterday to crack down on a new “abusive” scheme that helps companies avoid paying six-figure sums each year.

Sales manager Ian Moran of Anderson Group, which sells services to recruitment agencies, has been advising businesses to split into smaller limited companies to exploit the government’s employment allowance (EA), the BBC reported yesterday. Bosses are now exempt from liability for employers’ National Insurance contributions if they previously paid up to £2,000 a year.

EA was set up last year to help struggling small firms but has been seized upon by bosses who have relieved the public purse of thousands of pounds.

“If the government is serious about tackling tax abuse this has to be one its first acts on this issue or this abuse will grow rapidly,” said Tax Research UK expert Richard Murphy.

The BBC secretly taped Mr Moran pitching the idea to an agency recruiting 300 people.

He told the company that it could slash its annual National Insurance bill from £300,000 to nothing if it registered with HMRC as 100 smaller firms and that 10,000 workers were already employed under the aggressive scheme.

However, their plot to double that number could deprive the Exchequer of some £20 million in tax revenue.

Labour shadow chief secretary to the Treasury Shabana Mahmood said: “The Tory government failed to make tackling avoidance and evasion a priority in the Queen’s speech. HM Revenue and Customs need the powers backed by a tough penalty regime so that they can clamp down.”