‘Every’ UK umbrella company under attack by scam to payroll 63 IT contractors who don’t exist

Scammers are targeting “every” UK umbrella company by posing as a profitable US firm in need of an initial line of credit to payroll 63 IT consultants.

But the tech consultants are “phantom”-- they don’t exist, and umbrellas “excited” by the opportunity who then pay the credit never see their funds again.

Claiming to be from “LY Holding” and providing its genuine Companies House registration number, “Ravi” and “Eliza” first get in touch via email.

“We are currently seeking to outsource the payroll services for 63 of our consultants specializing in IT and Finance sectors,” the supposedly US-based duo begin.

“Could you please confirm if your company is able to provide payroll services for all 63 consultants? Below are our company details for your reference.”

'Please provide payment terms for candidate 1 of 63'

Later on, the duo request “payment terms” for the first candidate of the 63 who they ask to be paid, then saying it will be ‘BAU’ afterwards (whereby they -- the US firm/agency -- pays).

One umbrella which declined to be named says because it was dubious and Eliza picked up on the hesitation, only then was a single ‘test’ candidate offered.

On their email, and showing a good knowledge of HMRC’s latest umbrella regulation plan to  stop “bad actors,” the scammers then say, ironically:

“Please feel free to utilize these [payment account and Companies House] details for your due diligence.”

'Due diligence'

But it’s not just email which the scammers are using as a platform to try to fleece umbrellas.

One near-victim of the scam -- describing itself to ContractorUK as an “FCSA accredited umbrella company” -- said Eliza offered a ‘camera-on’ video call, which they accepted.

Writing about the Teams call today exclusively for this website, the brolly reveals that the duo’s demonstrable knowledge to help them appear convincing goes beyond just ‘due diligence.’

In fact, Eliza said the 63 consultants requiring the umbrella’s payroll are former PSCs who were assessed under IR35 but due to HMRC risk, LY Holding now needs them to be umbrella.

'Every umbrella has received a version of this scam email'

After the video call, the scammers apparently make it tricky to re-contact them -- a purportedly US-based firm -- during UK working hours.

That’s even though some brollies report that on top of being emailed, and video-called, the scammers sent the same enquiry to their corporate websites.

The multi-pronged, convincing and sophisticated nature of the scam may explain why Eliza and Ravi have been brazen enough to deploy it widely.

“I think every umbrella and payroll company I know got a version of it,” says Orca Pay Group CEO Robert Sharp, referring to the duo’s approach email.

'Red flags'

An umbrella company, unrelated to Orca Pay Group, said yesterday: “It’s happened to us this week.

“Thankfully, we saw the red flags early in the process, and so [we] were ultra vigilant.”

Another near-victim of the scam reflected: “I mentioned this agency name [LY Holding], and a lot of the FCSA agencies [said to me they] had been targeted by this company.

“At the time I was so thankful for our competitors, because [it was our competitors who] saved me from any embarrassment. And also saved our company money.”

'One umbrella has already fallen for it'

Shelley Ankers-Wainwright, a compliance adviser to umbrella companies, has been instrumental online in advising all umbrellas to be on their guard.

“I know [one umbrella company that] has already fallen for it unfortunately,” the boss of SAW Consulting said.

“So the more we can share and raise awareness, the better.

“Remember, if something seems to be good to true it usually is.”

The umbrella company sharing its experience of Eliza and Ravi today is a member of the Freelancer & Contractor Services Association (FCSA).

It also describes itself as a “large” umbrella company, but said it preferred to remain in the shadows.

'These scammers are targeting the whole umbrella company industry'

Yet the brolly is just one of the many targeted who saw better than to fund an initial payroll run for 63 IT and finance consultants who don't exist.

“They’re not targeting one specific body or membership group. They’re targeting the whole industry,” warns Orca’s Mr Sharp.

“[If] the credit is paid for [these 63] phantom contractors…your money is gone and never to be seen again.”

“So be vigilant, do some due diligence, and if in doubt steer clear.

“I appreciate it’s hard out there at the moment [for umbrellas] and… if you’re also getting emails like this…[and you agree it’s hard, you’re more prone] to fall into this trap.”

'Carbon copy'

Looking back on almost becoming prey in the hope of landing a profitable partner, one umbrella company sales rep admitted he “lit up” when he first saw the scammers’ email.

“I learned a couple of things [since] -- [first], don't get too excited,” the rep acknowledged. “And [second] do your research”.

At The Rebus Group, another umbrella company, a manager -- Keith Wiggins said: “This [post contains a] nearly a carbon copy of [the scam] email that I received. Hopefully nobody else falls for this.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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