An insolvency investigation has found that a payroll company, Magnetic Push, was playing an active role as an umbrella company in a multi-million pound tax avoidance scheme. The company director, Scott Ian Rooney, has been disqualified as a company director for 11 years.
Magnetic Push provided payroll services, trading from a serviced office in Liverpool, and operated for just 11 months before it went into liquidation and was voluntarily wound up. Magnetic Push was previously known as The Knowledgeshares Limited and My PSU Subcontractors Limited.
Scott Rooney declared a VAT liability of just £609 but the tax authorities claimed more than £4 million from Magnetic Push in the liquidation. The company also failed to declare PAYE and National Insurance contributions.
The absence of books and records meant investigators could not establish genuine company expenses from almost £37 million that had left the company account between February and December 2017 nor the reasons behind the company’s failure. On 1 March 2021, at the High Court in front of Judge Jones, Scott Rooney was disqualified as a company director for 11 years.
The Insolvency Service’s press release suggests that Rooney’s 11-year ban is a good outcome, however this sentiment is unlikely to be echoed anyone who was misled into his tax scheme, particularly if they are now being pursued by HMRC for unpaid taxes.
To put it into context, it seems very unfair that a scheme promoter is merely banned from running companies for 11-years, compared with loan charge victims who are aggressively pursued by HMRC for debts that they can’t pay, resulting in crippling financial and mental health stress.
HMRC always claim that they will pursue scheme promoters, however we very rarely see any evidence of this actually happening. Now that the Insolvency Service have concluded their investigations, let’s hope that HMRC will actually take some robust action against the promoter in this case!