Adrian Benedict Sacco, 55 and originally from Malta, has been disqualified after running an umbrella payroll services company with links to the Isle of Man, potentially costing the public purse millions in unpaid income tax, National Insurance Contributions and Corporation Tax.

Sacco was sole director of Best Employment Services (BES), which was incorporated in March 2015 and provided umbrella payroll services to senior or specialist high-earning contractors across various sectors, such as engineering, IT or HR, who were often working on short-term projects or fixed contracts.

Its website advised contractors that, based on an income of £100,000, they could retain £90,000, compared to £75,000 if they declared earnings through a limited company, or £55,000 if they were taxed as a standard employee through Pay As You Earn (PAYE). Contractors paid a fee to BES for providing this service.

BES received payment from clients for its employees’ work as a normal supplier. However, instead of then paying its employees their wages with the appropriate tax deductions, it paid them a small amount through PAYE, and the remainder was paid out to them as a loan. Neither PAYE nor National Insurance was deducted and paid for the loan portion of employees remuneration as it should have been.

BES outsourced its administrative functions to a number of connected companies in the Isle of Man. BES’ profits from its fees were split between these companies on a monthly basis, meaning BES reduced its profits, and reduced its corporation tax liability. Sacco was also a co-owner of one of these companies, and received an income from it. The Insolvency Service investigation found a total of nearly £25 million paid to these companies by BES.

Some of the outstanding loans due from BES’ employees were transferred to Retentia Services Limited, a company registered in Anguilla, with a £20 million loan book being exchanged by BES for an indemnity agreement. This arrangement ensured BES retained fewer financial assets, and Sacco knew there were no claims for which the indemnity would ever have been liable. Retentia was dissolved before the loans fell due meaning the loans made by BES to its employees were never recovered, nor did BES ever pay the correct tax on its employees’ earnings.

Following the liquidation of BES in March 2019 after auditors flagged concerns regarding the 2017 accounts and which led to a claim by HMRC for £2.7m in relation to unpaid corporation tax, the High Court also approved the liquidators winding-up order for the company in Anguilla, and efforts are being made to recover funds.

At the point of liquidation, HMRC has outstanding claims of £4.1 million comprising corporation tax, PAYE, VAT and interest although this claim is expected to increase.

Adrian Sacco, who has previously been a director of several other payroll companies which have been dissolved or liquidated over this period, was aware that the business model was open to challenge from HMRC. In the subsequent Insolvency Service 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 accepted a disqualification undertaking from Adrian Sacco, after he admitted failing in his fiduciary duty as a director, and breaching the Companies Act 2006 by failing to act with reasonable care, skill and diligence by employing such a business model. His disqualification is effective from 24 May 2022 and lasts for eight years.

The disqualification undertaking prevents him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.

Mark Bruce, Chief Investigator at the Insolvency Service said:

Despite his awareness of the risks, Adrian Sacco has failed in his duties to his employees whilst wilfully abusing the tax system for his own personal benefit. He has shown complete contempt for taxpayers and to those his company was supposed to be providing a service to.

This disqualification should serve as a warning to any other company directors who may be tempted to operate similar business models and flout their obligations that they will be investigated and punished.

Notes to editors

Adrian Benedict Sacco is originally from Malta, and his date of birth is August 1966.

Best Employment Services Limited (Company number 09473810).

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

• act as a director of a company
• take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
• be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions

Many umbrella companies are compliant with the tax rules but some use tax avoidance schemes. If you think the umbrella company you work for, or another employer, is not complying with the tax rules, you can report it to HMRC.

It is generally agreed that an umbrella company is a company that employs a temporary worker (an agency worker or contractor), often on behalf of an employment agency. The agency will then provide the services of the worker to their clients. Umbrella companies do not find work for the workers they employ. They can work differently but most umbrella companies employ workers using an employment contract which will set out your terms and conditions. This means the company must comply with employment law.

Further information about umbrella companies and tax avoidance is available through HMRC’s ‘Tax avoidance – don’t get caught out’ campaign, which helps contractors who are self-employed or employed through an agency or umbrella company to understand their pay arrangements, so they do not get an unexpected tax bill.

Information about the work of the Insolvency Service, and how to complain about financial misconduct.

Contact Press Office

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Prime Minister Boris Johnson will bring together his Cabinet today and pledge to continue delivering on what matters to the British people.

He will call on Ministers to drive forward progress on the government’s priorities – easing financial pressures on families, making access to NHS care quicker and easier, making the streets safer and levelling up and uniting the country.

Speaking at Cabinet, he will set out his vision for the coming weeks, which will see government deliver new policy commitments that will continue to make a real difference to people’s lives. This will include measures to reduce childcare costs for parents and a renewed drive to get more people onto the housing ladder.

The Prime Minister will also thank dedicated NHS staff as he highlights the progress made by the biggest catch-up programme in the health service’s history.

The Health and Social Care Levy, announced by the government last year, promised £39 billion of investment over the next three years so the NHS has the funding it needs to recover from the pandemic, treat patients quickly and end spiralling social care costs.

This represents more funding for health and social care than any government has ever invested before.

This money is already making a difference, with the NHS confirming yesterday that 90 Community Diagnostic Centres (CDCs) are now open across the country and have delivered 1 million checks and tests on patients so far.

These centres are vital to clearing the Covid backlogs because by identifying and diagnosing problems as early as possible, patients can progress to treatment and care more quickly, which will reduce waiting lists.

Speaking ahead of Cabinet, Prime Minister Boris Johnson said:

“This is a government that delivers on what the people of this country care about most.

“We have pledged £37 billion to support households with their finances, made our communities safer through hiring 13,500 more police officers, and tackled the Covid backlogs in the NHS by opening nearly 100 Community Diagnostic Centres so people can access care closer to home.

“Today, I pledge to continue delivering on these priorities. We are on the side of hard-working British people, and we are going to get on with the job.”

If confirmed, the companies involved can expect to face fines.

The provisional findings are:

• Elite Sports and JD Sports fixed the retail prices of a number of Rangers-branded replica kits and other clothing products from September 2018 until at least July 2019.
• Rangers FC also took part in the alleged collusion but only to the extent of fixing the retail price of adult home short-sleeved replica shirts from September 2018 to at least mid-November 2018. All 3 parties allegedly colluded to stop JD Sports undercutting the retail price of the shirt on Elite’s Gers Online store.

At the time, Elite was the manufacturer of Rangers-branded clothing and also sold Rangers-branded products directly through Gers Online Store and later in bricks-and-mortar shops in Glasgow and Belfast. The only UK-wide major retailer selling those products at the time was JD Sports.

The Competition and Markets Authority (CMA) alleges that Rangers FC became concerned about the fact that, at the start of the 2018-19 football season, JD Sports was selling the Rangers replica top at a lower price than Elite, which was seen at the time as the club’s ‘retail partner’. This resulted in an understanding between the 3 parties that JD Sports would increase its retail price of the Rangers adult short-sleeved home replica shirt by nearly 10%, from £55 to £60, to bring it in line with the prices being charged by Elite on Gers Online.

The CMA is also concerned that Elite and JD Sports – without involvement from Rangers –colluded to fix the retail prices of Rangers-branded clothing, including training wear and replica kit, over a longer period. This included aligning the level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect their profit margins at the expense of fans.

Elite and JD Sports applied for leniency during the CMA’s investigation and confessed to cartel activity. Provided they continue to cooperate with the investigation, each will receive a reduction on any financial penalties the CMA may decide to impose. Any business found to have infringed the prohibitions in the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover.

Michael Grenfell, Executive Director of Enforcement at the CMA, said:

We don’t hesitate to take action when we have concerns that companies may be working together to keep costs up.

Football fans are well-known for their loyalty towards their teams. We are concerned that, in this case, Elite, JD Sports and, to some extent, Rangers, may have colluded to keep prices high, so that the 2 retailers could pocket more money for themselves at the expense of fans.

These are the CMA’s provisional findings and the companies involved now have the chance to make representations to the CMA before it reaches a final decision.

More information can be found on the case page: Suspected anti-competitive behaviour in relation to the pricing of Rangers FC-branded replica football kit.

Notes to editors:

1. For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk.

2. The Chapter I prohibition in the Competition Act 1998 prohibits agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK.

3. The statement of objections is addressed to the following parties: Elite Sports Group Limited and its parent company Elite Corporation Limited; JD Sports Fashion Plc; and The Rangers Football Club Limited and its parent company Rangers International Football Club Plc.

4. A statement of objections gives parties notice of a proposed infringement decision under the Competition Act 1998. It is a provisional decision only and does not necessarily lead to an infringement decision. Parties have the opportunity to make written and oral representations on the matters set out in the statement of objections. Any such representations will be considered by the CMA before a final decision is made. The final decision will be taken by a case decision group, which is separate from the investigation team and was not involved in the decision to issue the statement of objections.

5. The statement of objections will not be published. However, any person who in the CMA’s view is directly and materially affected by the outcome of the CMA’s investigation and is likely materially to assist the CMA in its investigation may request a non-confidential version of the statement of objections by contacting the CMA.

6. Under the CMA’s leniency policy, a business that has been involved in a cartel may be granted immunity from penalties or a significant reduction in penalty in return for reporting cartel activity and assisting the CMA with its investigation. Individuals involved in cartel activity may also in certain defined circumstances be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002 and from competition disqualification proceedings. The CMA also operates a rewards policy under which it may pay a financial reward of up to £100,000 in return for information which helps it to identify and take action against cartels. For more information on the CMA’s leniency and informant reward policies, go to leniency and rewards.

7. Anyone who has information about a cartel is encouraged to call the CMA cartels hotline on 020 3738 6888 or email cartelshotline@cma.gov.uk.