Magnetic Push limited operated for just 11 months before it went into liquidation revealing a multi-million pound tax avoidance scheme while failing to justify £37 million expenditure.
Scott Ian Rooney (40), of Leicester, was appointed sole director of Magnetic Push Limited in February 2017. Trading from a serviced office in Liverpool, the company was formerly known as ‘The Knowledgeshares Limited’ and ‘My PSU Subcontractors Limited.’
After 11 months trading as Magnetic Push Limited, the company went into liquidation. The liquidator reported to the Insolvency Service of Mr Rooney’s failure to cooperate and reluctance to hand over company’s books and records. This suspicious behaviour triggered an investigation by the Insolvency Service into the matter.
The findings revealed that Magnetic Push was functioning as an active umbrella company in a wider tax avoidance scheme. Mr Rooney declared a VAT liability of £609 but the tax authorities claimed more than £4 million from Magnetic Push in the liquidation. He also failed to declare PAYE and National Insurance contributions.
Investigators could not establish the real reasons behind the company’s failure nor identify genuine expenses from the £ 37 million that left the company’s account between February and December 2017 due to the absence of company records withheld by Mr Rooney.
On the 1st March 2021, Mr Rooney, in the presence of Judge Jones at the High Court was disqualified as a company director for 11 years. This means that from the 22nd March 2021, Scott Rooney is prohibited by the court from being involved in the promotion, formation or management of a company.
Martyn Pettitt, Deputy Head of Insolvent Investigations at the Insolvency Service, highlights the importance for company directors to keep adequate books and records because consequences thereof will be treated seriously.
Umbrella companies have been placed under the spotlight by government in recent weeks in order to expose perpetrators who are found to be violating the law. We support the action taken by government to ensure fair practices are enforced. We urge businesses to be weary of tax avoidance schemes. An example of this, umbrella companies that offer unrealistic ‘too good to be true’ take home rates through artificial schemes. If you are unsure about being involved in one, resources are available to assist you how to spot the signs of tax avoidance schemes.
If you want to ensure you are choosing the right payroll provider, there are 2 accreditations that govern the umbrella sector, namely, ‘Professional Passport’ (PP) and ‘The Freelancer & Contractor Services Association’ (FCSA). Each of these accreditations provide a list of audited providers for you to choose from. We at ePayMe are accredited and audited by Professional Passport.
Source: GOV.UK – The Insolvency Service