Adrian Benedict Sacco, 55 and from Malta, has been disqualified after running an Isle of Man-linked payroll services umbrella company which could cost the public purse millions in unpaid income tax, contributions national insurance and corporation tax.
Sacco was the sole director of Best Employment Services (BES), which was incorporated in March 2015 and provided general payroll services to high-earning senior or specialist contractors in various sectors, such as engineering, IT or HR, who often worked on short notice. fixed-term projects or fixed-term contracts.
Its website advised entrepreneurs that based on an income of £100,000 they could keep £90,000, compared to £75,000 if reporting income through a limited liability company, or £55,000 if reporting income through a limited liability company. they were taxed as a standard employee via Pay As You Earn (PAID). Contractors paid a fee to BES for providing this service.
BES received payments from customers for the work of its employees as a normal supplier. However, instead of then paying his employees their salaries with the appropriate tax deductions, he paid them a small amount through PAYE, and the rest was given to them as a loan. Neither PAYE nor National Insurance was deducted and paid for the loan portion of employee compensation as it should have been.
BES has outsourced its administrative functions to a number of Isle of Man related companies. BES’ profits from its fees were split between these companies on a monthly basis, meaning that BES reduced its profits and reduced its corporate tax liability. Sacco also co-owned one of these companies and derived income from it. The Insolvency Service’s investigation revealed a total of nearly £25million paid to these companies by BES.
Some of the outstanding loans owed by BES employees were transferred to Retentia Services Limited, a company registered in Anguilla, with a loan book of £20 million exchanged by BES against an indemnity agreement. This arrangement ensured that BES retained fewer financial assets, and Sacco knew that there were no claims for which the indemnity would ever have been liable. Retentia was dissolved before the loans were due, which means that the loans made by BES to its employees were never recovered and that BES never paid the correct tax on the income of its employees.
Following the winding up of BES in March 2019 after auditors raised concerns over the 2017 accounts which led to a claim by HMRC of £2.7million in relation to corporation tax unpaid, the High Court has also approved the liquidation order of the company’s liquidators in Anguilla, and efforts are being made to recover the funds.
At the time of liquidation, HMRC has outstanding debts of £4.1 million comprising corporation tax, PAYE, VAT and interest, although this debt is expected to increase.
Adrian Sacco, who has previously been a director of several other payroll companies that have been dissolved or liquidated during this period, was aware that the business model was open to challenge from HMRC. During the Insolvency Service’s subsequent investigation, he confirmed that he had taken legal advice, but not in specific relation to BES’ business model.
The Secretary of State for Business, Energy and Industrial Strategy has accepted a pledge to disqualify Adrian Sacco, after he admitted breaching his fiduciary duty as a director and breaching companies law of 2006 by failing to act with reasonable care, skill and diligence in employing such business model. His forfeiture is effective as of May 24, 2022 and lasts eight years.
The forfeiture undertaking prevents him from getting involved directly or indirectly in the promotion, constitution or management of a company, without judicial authorization.
Mark Bruce, Chief Investigator for the Insolvency Service, said:
Despite his awareness of the risks, Adrian Sacco failed in his duty to his employees while deliberately abusing the tax system for his own personal gain. He showed total disregard for the taxpayers and for those his company was supposed to serve.
This disqualification should serve as a warning to any other business executives who may be tempted to exploit similar business models and flout their obligations that they will be investigated and sanctioned.
Notes to Editors
Adrian Benedict Sacco is from Malta and his date of birth is August 1966.
Best Employment Services Limited (company number 09473810).
A disqualification order means that, without the express permission of a court, a disqualified person cannot:
- act as a director of a company
- participate, directly or indirectly, in the promotion, incorporation or management of a company or a limited liability company
- to be a receiver of a company’s assets
Forfeiture undertakings are the administrative equivalent of a forfeiture order but do not involve court proceedings.
People subject to a disqualification order are bound by a range of other restrictions
Many umbrella companies comply with tax rules, but some use tax avoidance schemes. If you think the umbrella company you work for, or another employer, is not following the tax rules, you can report it to HMRC.
It is generally accepted that an umbrella company is a company that employs a temporary worker (temporary worker or subcontractor), often on behalf of a temporary agency. The agency will then provide the worker’s services to its clients. The umbrella companies cannot find work for the workers they employ. They may work differently, but most umbrella companies employ workers under an employment contract which will define your terms and conditions. This means that the company must comply with labor law.
Further information on umbrella companies and tax avoidance is available through HMRC’s ‘Tax Avoidance – Don’t Get Caught’ campaign, which helps self-employed contractors or employees through an agency or umbrella company to understand their terms of compensation, so that they do. not to receive an unexpected tax bill.
Information about the work of the insolvency service and how to complain about financial misconduct.
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