Money Talk - Illegal Workers

Sept. 7, 2010 - PRLog -- From the newspapers it’s easy to get the impression that nothing much happens in Britain during the long ‘summer holidays’: the politicians away sitting around their pools in Tuscany preparing the next round of policy initiatives to be trumpeted in the forthcoming conference season; journalists sunning themselves next door sending the odd ‘reflective’ piece on the state of the nation [..somehow it always looks different after a few bottles of local red wine]. But that doesn’t mean that back in the real world everything has stopped. Just a quick trawl through the BBC’s recent news archives is quite revealing; there are all of the ‘local’ stories from across the UK that individually very rarely make any national headlines but when looked at from afar do give a slightly different picture.

No papers = big problem.

Look at the UK Border Agency for example, they’ve been busy-enough during the summer. In just the few weeks between mid-June and mid-August there were reports of five separate cases of raids by the Border Agency on small businesses allegedly employing illegal workers: Cornwall [June], Leicestershire and Cumbria [July], Nottinghamshire and Shropshire [August]. In every case two or three migrant workers were reported as working illegally at each business – i.e. without the proper documentation to permit them to work in the UK. The stories all end in the same way: the employers in each case facing fines of £10,000 per worker for failing to carry out the necessary checks or maintaining the proper records of those checks. What is rarely mentioned in the news reports is that if the employers are eventually found to have knowingly employed ‘illegals’ then they face unlimited fines and/or prison sentences.
Now as it happens all of the cases reported above involved fast-food outlets or restaurants; the other interesting feature they have in common is that with the exception of the raid in Nottingham itself, all of the others have been in relatively small market towns rather than in major urban areas. In other words, being a small, remote business is no guarantee of ‘immunity’ or invisibility as far as these investigations are concerned. If summer is the logical time to look at seasonal workers in the catering trade, where will the focus shift when the summer is over?

Hand-job anyone?

Perhaps when the holiday season’s over the next target will be the hand car wash market. As Merril pointed out in her comment column last month, this area is already of interest to SOCA [the Serous Organised Crime Agency] – although rather than directly looking for illegal workers, it’s more probable that their interest would be related to potential money-laundering activities in what is almost by definition a ‘cash’ business. If SOCA are looking at this sector, it would be very surprising if HMRC and the Benefits Agency didn’t also have it on their radar somewhere, if only from the perspective of tax evasion and benefit fraud. One issue that doesn’t seem to get raised about these operations is that many of them appear to be based on abandoned petrol forecourts that at some time in the [recent?-] past were owned by the oil majors; just who actually owns these derelict sites now? Funnily enough the last report of a raid on one of these operations that we could find at the time of writing was from September 2009; that one involved three separate car wash locations in Lincolnshire. Roll on the end of summer.

Temptation, temptation..

OK you say, but those were ex-forecourts. Nothing to do with ‘legit’ operations. So let’s look at petrol retailing today: Good staff are always hard to find, sometimes it’s hard to find any staff at all; small towns don’t have the same labour-pool as large conurbations. A hard-pressed employer may be tempted to ‘overlook’ some of the paperwork that they’re supposed to check before taking anyone on because those shifts need filling next week. Some employers, struggling to attract staff against the pay and conditions offered by major High Street retailers for even the most menial posts, may be tempted to offer ‘cash in hand’ rates with no questions asked. Then we have the older, perhaps smaller, forecourts where the ancient rollover wash has simply packed up or fallen apart. Much as they’d like to put in a new one, the cost looks daunting – and that’s before the building and plumbing changes that may be necessary to comply with more modern environmental regulations. Along comes a ‘friend of a friend’ who ‘knows someone’ who’d be interested in ‘renting’ the old bay and putting in a few ‘kids’ to man a hand-wash; sounds attractive – a guaranteed income every week and maybe a few more customers drawn to the site by the prospect of a cheap wash while they shop. Of course there will be some genuine, honest, entrepreneurs out there just needing a start in their own business; and with little or no start-up capital involved a hand-wash service is as good a way as any. The dealer feels safe, after all he’s not employing the washers so who cares whether they’re legal, pay tax or claim benefits? Nothing in writing, no questions asked, no lies told.

Money may be the least of your problems.

So why are we talking about these things in a column devoted to ‘money’? The simple answer is that when times are hard it can be tempting to look for solutions that may edge into the shadowlands of illegality. Unfortunately when the spotlight turns onto them, the real criminals have a habit of disappearing into nowhere, leaving the ‘legit’ business holding the proverbial baby. We’ve already mentioned the ‘standard’ £10,000 fine per illegal employee [above] as well as the potentially unlimited fines for knowingly employing them. Where tax or benefit fraud are concerned, if the authorities can’t find the individual employees who’ve done a runner, they’ll turn to the employer whom they still have in place, and try to recover the due tax from them [along with penalties and interest]. If the thought of that isn’t enough of a deterrent then the potential consequences of getting caught-up in a money-laundering scam should terrify any normal business owner; just try this for a flavour of where that can lead:

The Proceeds of Crime Act 2002 (PoCA) Part 7 .. “Entering into or becoming involved in an arrangement which facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person: section 328 – Conviction…. can result in imprisonment for up to 14 years and/or an unlimited fine.”

Other penalties can include the seizure of any assets related to a business involved in money laundering; that could potentially include the premises where such a business was allowed to operate. Oh, and apart from any ‘criminal’ aspects, bear in mind the potential problems with your business insurance cover: any claims against you under your Employers or Public Liability insurance might prove rather ‘interesting’ if your insurance company discovers that the activities concerned weren’t quite as legal as you’d have them believe. As they used to say on ‘Crimewatch’ – sleep easily, don’t have nightmares – but to do that you need to make sure that your business is fully within the law.

Contact us for advice on any of the issues covered here. You can do this by visiting http://www.ekwgroup.co.uk.

# # #

EKW Group is recognised as a leading retail accountancy specialist and has been providing bureau and outsourced accounting and associated services to retail branded networks since 1935.