We all know that you file your accounts with Companies House and your tax return with HMRC, but were you aware that these figures are not checked unless audited? Or that you do not need an accountant to file your companies accounts? This has allowed fraudsters to set up companies and file fictitious accounts a year later to appear far more prosperous than they are in reality.
The next step would be for the fraudulent company to approach a recruitment agency and ask them to payroll a number of temporary workers. These workers are genuine and are completing work for the company. For the consultant being approached it appears to be a win-win situation – they can profit out of workers that are already in place. The fictitious accounts that have been filed will often allow the company to bypass automated credit checks, and obtain credit insurance. The company will later fold before paying any invoices and the agency is left with the bill for the temporary workers payments. Insurance companies will not insure against fraudulent activity like this, so therefore the full liability is on the recruitment company.
The lesson to be learnt here is that if something seems to good to be true, it probably is. It is important to remember the basics when taking on new clients. Visit each one to get a full understanding of the company you are going to be working with. Check their filing history on companies house – if they have undergone a major growth over the last year or so, had a variety of changes in directorship, or changes in status, query it with the client. There may be a genuine reason, but it is often a sign of fraudulent activity.
Most importantly, be aware that there are a load of fraudsters operating in the recruitment sector. Ensure your consultants are aware of the risks, and what to be looking out for.