After a 16-month process, two Lancashire businesses operating under the Zeva umbrella have dropped an appeal over a Gangmaster Licensing Authority (GLA) licence revocation meaning they will have to cease trading in the sector as of Monday [22 December].

The businesses, Rawtenstall-based Apus Contracting and Vela Contracting, which both supplied workers to factories producing dairy products, were found to have operated a payday-to-payday tax relief model by the GLA last year.

In August last year [2013] the GLA revoked the licences of both companies “without immediate effect”, due to fact the workers were not deemed to be in immediate danger. 

Zeva subsequently appealed the revocation, which was due to be heard in court on Monday [15 December].

According to a statement on its website written by Gary Butterworth, it dropped the appeal for “commercial reasons”.

Butterworth, according to the GLA, directly owned the two companies in question as well as UKPA, which was also investigated.

Butterworth continued to say: “After consulting with legal advisers and ascertaining the costs of continuing the appeal, this was in the best interest of the company’s clients and staff. Zeva will now continue to focus its efforts on providing a compliant umbrella service to temporary workers outside of this regulated sector.”

He said the company would no longer be operating in the GLA sector (food processing and packaging) but would continue operating the payment model that it was investigated for, “as we are acting within the law to provide a real benefit to our employees”.

GLA chief executive Paul Broadbent said in a statement that the intention to continue using the scheme was worrying, and that the GLA would inform HM Revenue & Customs (HMRC).

According to the GLA, Apus and Vela were found to have classified amounts of their workers’ wages as unsubstantiated and inflated expenses to make them exempt from tax. Workers’ ‘expenses’ were allegedly sent to another company, UKPA, ‘for verification’. 

UKPA claimed nearly 30% of the estimated expenses as a service charge that effectively reduced workers’ wages to below the National Minimum Wage, a breach of GLA licensing standards.

The GLA investigation found no expenses were ever checked or verified by UKPA, and no evidence was provided by Apus or Vela to support their case.

Vela was also found to have withheld wages by failing to pay holiday pay owed when workers left the company.

The appeal, lodged by Zeva, meant the companies could continue operating until the appeal was resolved.

The GLA was sceptical of Zeva’s appeal motives.

Broadbent said: “In my opinion this appeal was entered solely to prolong the amount of time these companies could operate and bank further profits.

“They have also sought to adjourn the hearing in order to prolong this period, wasting more public money.”

According to Butterworth’s statement, the loss of the licences meant some Zeva employees would be made redundant though it was working to find affected people other employment.

The GLA statement said during the appeal process, Butterworth attempted to distance himself from the companies’ operations by restructuring the businesses through a series of companies registered in offshore tax havens, though he remained the beneficial owner throughout.

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