Fraudsters purporting to be legitimate recruitment companies, have been extorting money from job seekers for years. However, in 2023 recruitment businesses are as likely to lose money to fraudsters as are job seekers. The internet and related technology have made it possible for recruiters to place staff all over the world, without ever meeting either the client or the workers they place with them. This technology has greatly increased the size of the geographic marketplace for recruiters, but it has also made it much easier for fraudster to work their scams. In one common scam the fake client contacts the recruiter to say that they would like them to take some of their staff on their books and do the payroll for them, for a fee. The fraudsters do their homework and use sophisticated measures so that their fake companies pass the usual credit and identity checks. The unsuspecting recruiter pays the non- existent staff for weeks before they realise that the client is a fraudster. This is just one type of fraud, there are others, but they can almost always be avoided if the recruiter insists on meeting the client at their business premises and ideally the staff, before paying out any money. If this isn’t possible most fraudsters can be spotted if a thorough check is made on the history and current structure of their fake companies. Fraudsters are constantly changing and improving their scams. It’s not easy to spot every scam, but even superficial checks will identify a lot of them.
Owners need to keep up with developments and be on their toes to avoid being caught out.
SELLING YOUR BUSINESS IS TAX EFFECTIVE.
The current system of taxing owners when they sell their businesses was introduced in 2008 by the then Labour government. Entrepreneurs Relief on Capital Gains Tax, now known as Business Asset Disposal Relief (BADR), originally provided that most owners paid just 10% tax on the first £10 million of any capital gain, when they sold, but this benefit has since been reduced to £1 million. Labour have undertaken to remove this concession altogether, if they are returned to power at the next election. If this happens, sellers will pay more tax when they sell their businesses. The worry is that things won’t stop there. Whichever party wins the next election, there will be a lot of pressure on them to repay a big chunk of the money borrowed to fund the support given during the pandemic. The fact is that capital gains tax rates are generally much lower than income tax rates. The current highest rate of capital gains tax payable is 28%, a long way below the 45% highest rate of income tax. Morally, it is difficult to justify someone who works hard and pays income tax on their earnings paying a higher rate than someone who inherits money and lives off their investments. Hard pressed governments will be tempted to raise capital gains tax rates to bring them in line with income tax rates. This isn’t a problem if the government recognises that building a company is very different from living off unearned investments and raise the amount that can be charged at 10% under BADR, but governments don’t always do the obvious.
Anyone thinking of selling their business in the next year or two, shouldn’t ignore the impact that changes to the tax regime may have on the proceeds they will get from the sale.
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