Gill Cooper

It's more likely to be money laundering rather than ID fraud. The company directors could add "ghost" employees to the payroll, enter wages into the accounts for the ghosts, and then pay those wages to themselves in cash. If they are "paying" the ghosts enough for tax to be deducted, the real person may get issued a new tax code. But the dodgy company will never pay the tax over to HMRC. By the time the debt is chased, they've long gone.