Reed Umbrella Ltd, a company that provided legal and invoicing services to the fated Sunday Solutions tax umbrella scheme, has been wound up in the High Court in the public interest following an investigation by an arm of the Insolvency Service.
The grounds for winding up Reed Umbrella Ltd which were petitioned to the High Court in January were:
- conduct falling below acceptable standards of commercial probity;
- failure to submit accounts;
- failure to submit annual returns; and
- abandonment.
The Court was told that Reed Umbrella Ltd provided legal and invoicing services to the discredited Sunday Solutions scheme. These services involved the checking of contracts between consultants in the scheme and end users. Each time a consultant's end user changed or the terms of engagement altered, such as a change in the hourly rate, the contract was reviewed and a charge made. Their activities expanded around February 2009 to include invoicing services to both pre-existing and new consultants using the Sunday Solutions scheme.
Reed Umbrella initially traded as Simpson Cooper & Associates, changing its name to Sunday Solutions UK Ltd in September 2008 and then to Reed Umbrella Ltd in February 2009.
In the year to 30th April 2008 the company's turnover was just in excess of £0.5 million. Although no annual or management accounts were prepared after that year it is known that it collected and processed some £21.4 million of fees earned by consultants. Many of the approximate 1500 consultants were left with tax arrears to pay personally having believed that such liabilities had been taken care of by the scheme provider.
The Sunday Solutions scheme was originally promoted and operated by Sunday Solutions Ltd and Bradbury & Co Ltd, both of which were ordered into liquidation in the public interest in December 2010 on the grounds that they displayed a level of commercial integrity that fell decidedly short of acceptable standards. The Insolvency Service described the scheme as unscrupulous.
In ordering Reed Umbrella Ltd into liquidation Ms Registrar Barber said:
“The Sunday Solutions Scheme had been marketed as an umbrella scheme by which self-employed consultants were invited to delegate responsibility for invoicing and collection of fees to Sunday Solutions, whilst Bradbury was to provide accountancy and taxation services. In reality this did not occur and Sunday Solutions and Bradbury, as mentioned, were wound up in the public interest. The grounds were that the companies marketed and used partnerships over which the consultant clients – and intended partners – lacked any control; the marketing of the scheme was misleading; the companies levied excessive and arbitrary fees for their services and that the companies failed to meet the clients' tax liabilities or prepare and file accounts and returns for their clients……”
This sorry state of affairs serves as a reminder to any freelancer considering using a tax umbrella scheme that they use a reputable firm.
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