In the backdrop of the exposure of unscrupulous umbrella companies committing Employers’ National Insurance Contributions [NICs] fraud, one business leader in the security industry has raised concerns that similar Income Tax and National Insurance evasion is occurring in the security industry.
Rachel Fleri is the managing director and owner of Specialist Security Ltd. Based in Cardiff, the firm is a provider of security solutions to a wide range of businesses across both the private and public sectors. Being at its helm, Fleri is knowledgeable about how the security industry operates in Britain’s night-time economy.
While the launch of the Security Industry Authority [SIA] and subsequent introduction of the personal licence scheme and Approved Contractor Scheme [ACS] have all raised standards in the industry, Fleri is worried that law-abiding businesses like hers operating in the sector are not currently competing on a level playing field.
Fleri told The Parliamentary Review: “There are many noncompliant companies in our sector, and there are also huge multinationals, the biggest four of which have a turnover of almost half of the entire UK market. The industry operates extensively in the night-time economy, and while licensing is statutory for individuals, it is not the case for companies.”
Fleri goes on to explain that the consequences of this are that many security workers are operating on a self-employed basis and in some cases even paid in cash. Operating in such a manner allows unscrupulous employers to avoid paying National Insurance Contributions for their employees, and the Treasury also loses out in revenue from lost Income Tax.
“Many workers operate as self-employed or are even paid cash, which enables companies to avoid paying NIC, and their staff avoid paying PAYE. This is lost income for the government and allows such companies to charge reduced rates. These companies supply operatives who are not directly employed, which tends to drive the price down overall.”
By way of a solution, Fleri suggests that self-employed status in the security industry should be abolished, a form of business licensing introduced, and the Security Industry Authority should seek to co-ordinate better with HMRC to crack down on offenders.
“I believe that in this sector, there ought to be no self-employment, in order to take due care of our employees and the industry as a whole,” Fleri said. “We care about the end user, not just the bottom line.
“The SIA has begun to work more closely with HMRC which is a step in the right direction. However, I would like authorities to go further by introducing business licensing. While I understand that regulation can increase business bureaucracy, the introduction will provide additional treasury income and help reduce organised crime.”
Official figures from September 2021 indicated that as much as £35 billion of tax and NI revenue was lost in the UK over the 2019/20 tax year due to non-payment, avoidance and fraudulent activity.
The amount of tax lost specifically to fraud that year, based on the HMRC figures, was at least £15.2 billion.