Labour and trade unions have called on the government to take action after a Guardian investigation found that an aggressive tax avoidance scheme used by temporary recruitment agencies is depriving the taxpayer of “hundreds of millions” of pounds a year. Agencies have made large sums by using “contrived” financial arrangements to slash their employer’s national insurance bills and by exploiting VAT rules originally designed to benefit very small businesses. Guardian undercover footage shows Patrick Griffin of Premier Payco, a provider of the schemes, outlining how workers’ contracts are transferred from a single employment agency into a web of thousands of tiny companies, to benefit from an accumulation of small tax breaks, and how each of the companies is ostensibly run by overseas directors.Rebecca Long-Bailey, the shadow chief secretary to the Treasury, said such agencies were “exploiting loopholes in the law in their pursuit of profit”.