A new type of fraud has swept across the umbrella company sector, and it’s targetting compliant umbrella companies, recruitment agencies and tens of thousands of honest, hard-working contractors and freelancers. Please keep reading as we explain what umbrella cloning is, what has happened so far, which companies have been targeted, and how to identify fake communication from criminals pretending to represent legitimate umbrella companies.
What has been happening in the industry?
Last month, a leading UK-based umbrella company suffered from a significant cyber security threat. The umbrella company appeared to have been the victim of cyber-criminal cloning – the act of criminals creating fake companies while pretending to be the compliant, long-standing umbrella company.
The criminals behind the attack targeted recruitment agencies pretending to be the umbrella company. They presented agencies with “new” bank account details as a way of trying to steal massive amounts of money. The impact of this was felt throughout the supply chain because the umbrella company was forced to shut down all operations (to launch an investigation), and the umbrella’s employees were left without payments.
Since the September cyber-attacked which shook the entire sector, new fraud attempts have been identified. On the 21st of October, a Freelancer and Contractor Services Association (FCSA) and Professional Passport accredited umbrella company released a social media warning to its followers. The umbrella announced that they were aware of criminals pretending to represent them and “offering illegal tax avoidance schemes” to temporary workers.
Another well-known, FCSA accredited umbrella has also announced they’re aware that criminals have created fake companies (cloned companies) with very similar names to them. This is another case of company cloning where criminals will pretend to represent the compliant umbrella company to try and manipulate the supply chain into making payments to illegitimately owned bank accounts.
“Remain vigilant and cautious at all times”
Ciaran Woodcock, Director at Churchill Knight Umbrella, has said the following about the recent spate of cloning in the umbrella company sector.
“Not a day seems to pass without an attack on the umbrella company industry. The latest criminal activity [cloning] is appalling. It poses a significant threat to well-respected and compliant umbrella companies and tens of thousands of hard-working employees who use them for their payroll.
I would like to ask all contractors who use an umbrella company, whether it’s Churchill Knight Umbrella or another provider, to remain vigilant to cautious at all times. Never hand out personal information unless you’re certain you’re passing it to the correct entity.
Also, if you suspect foul-play of any type, please do not hesitate to contact the umbrella company you suspect has been cloned and the FCSA. The FCSA is working tirelessly to try and protect the sector. By sharing the potentially suspicious activity with them, you will be helping to protect the integrity of the industry. You will also be working towards the downfall of the criminals behind the spate of cloning within the industry.”
“We live in a highly cynical cyber world”
Phil Pluck, CEO at the FCSA, said the following aimed at recruitment agencies to help them identify cloned umbrella companies:
“I can only assume that this cloning activity is designed to persuade others to think that they are dealing with a legitimate partner and that there is a financial motive underlying this activity.
This is not just aimed at FCSA companies, and so I would advise any agency dealing with any partner company where money is transferred to agree on a clear transfer protocol with their partner and to treat with caution any approach that states that banking arrangements have been altered or bank accounts have changed and that funds should now be diverted to that account.
We live in a highly cynical cyber world where there are many attempts to steal money from innocent parties. Thanks to the detailed due diligence checks that we have in place at FCSA, we were able to alert FCSA members and their partners to this issue at the earliest possible moment.”
Advice for recruitment agencies
There are several ways that recruitment professionals can protect their agency and the supply chain.
- Update all members of the team about the threat to recruitment agencies, umbrella companies and temporary workers.
- Always check to validate communication received within the supply chain is legitimate.
- Never update bank details for a company you work with until you have spoken to senior staff and have all the information. Check the bank details you are updating match the company.
- Never send money to a bank account if you have even an ounce of concern.
- Please speak to any company you suspect is being cloned and report it to the appropriate authority.
- Remind your candidates about the security threats and fraud within the sector – to ensure they can move forward with peace of mind.
- Only refer candidates to companies that you can be sure are compliant with HMRC’s rules and regulations. Always conduct thorough and frequent due diligence on your agency’s Preferred Supplier List (PSL).
We’ve written a blog for professionals in the recruitment sector about umbrella company cloning and the associated risks, and it’s available here.
Important information for Churchill Knight Umbrella employees and our accountancy clients
If you are a Churchill Knight Umbrella employee of you’re using the accountancy services of Churchill Knight & Associates Ltd, please read the following carefully.
- Our website is churchill-knight.co.uk. Always ensure you’re on the right website. If you are not sure about the authenticity of a company contacting you, look up their credentials on Companies House. Criminals are launching new umbrella companies that are named almost identically as existing providers. Do not be tricked into engaging with a fake company pretending to be something else.
- Our telephone number for existing umbrella company employees (Customer Support) is 01707 669026.
- Limited company clients can call their Account Manager directly for support, or our main line: 01707 871610.
- If you ever receive any communication (email, letter, SMS, etc.) that you have any concerns regarding its authority, please get in touch with us immediately and do not act upon the information within. The same applies to phone calls – if you receive a call from somebody claiming to be from Churchill Knight Umbrella – please ask for proof of the caller’s identity. If you’re unsure, please call us back to confirm that a member of our team tried to contact you.
- Once you have completed the registration process with Churchill Knight Umbrella and have been paid for the first time, we will not contact you asking for bank information. We operate compliantly and follow the FCSA’s Codes of Compliance. We will never contact you offer you the chance to retain more of your money because we use PAYE (HMRC’s tax system).
- If you notice any suspicious activity, such as suspected cloning of an umbrella company (either Churchill Knight Umbrella or another umbrella company within the sector), please contact the FCSA and the umbrella you believe has been cloned. You can click here to contact the FCSA Please also share information with us so we can alert the relevant authorities.
- If you are ever offered inflated take-home pay (upwards of 85%) from an umbrella company, never engage with them. They are almost certainly a non-compliant umbrella company (tax avoidance scheme), and you could face severe penalties from the government.
If you have any questions about the information in this article, please contact your Churchill Knight & Associates Ltd Account Manager, or Churchill Knight Umbrella’s Customer Support Team.
Founded by an IT Contractor in 1998, Churchill Knight has become one of the most respected contractor accountants in the UK. We’ve helped over 20,000 contractors with their accountancy requirements. As well as our accountancy services, we also have an industry-leading PAYE umbrella company and dedicated in-house personal tax department. Whichever service you choose, you can move forward with complete peace of mind. We are proud of the reputation we’ve built over the years, and our FCSA accreditation proves how committed we are to compliance within our sector. Keep reading…