Crackdown on civil service tax avoiders

More than 2,400 people were employed 'off-payroll', allowing them to reduce their tax bill

The Government is to launch a crackdown on high-earning public sector workers who are able to avoid tax by being paid through private companies.

The Treasury said it had identified more than 2,400 people employed by Government departments "off-payroll" – potentially allowing them to significantly reduce their tax bill.

The Chief Secretary to the Treasury, Danny Alexander, said 40 per cent of cases went back two years or more and some as far as 10 years. In 70 per cent of cases, people had been earning more than £400 per day.

The review was commissioned after it was revealed that Ed Lester, the head of the Student Loans Company, had been paid via a company without tax being deducted, saving him tens of thousands of pounds. The deal had been sanctioned by both the Department of Business and the Treasury.

Yesterday, Mr Alexander said new rules would ensure that senior Government staff must be on the payroll unless there were exceptional temporary circumstances. Departments will also have to seek formal assurance from contractors, where they are used, that they are paying full income tax and national insurance, and if assurances cannot be given, contracts would be terminated. He said that since January, 350 contracts using off-payroll measures have been ended.

Mr Alexander added that the Government would consult on a new law to require people controlling an organisation to be on its payroll. "We all have to pay our fair share to help pay off the deficit," he said. "It's clear that off-payroll engagement without sufficient transparency has been endemic in the public sector for too many years."

Mr Alexander said the review had looked at all Government departments, their arms length bodies, and the boards of NHS trusts for employees earning more than £58,200 per year. However it had not sought to identify tax avoidance but only off-payroll contracts – he said these were "opaque" and tax avoidance could have taken place. He said most cases it had found were technical specialists – with 40 per cent made up of IT staff. In 10 per cent of cases, money was paid directly to a personal service company, 85 per cent via an intermediary such as an employment agency, with the remaining 5 per cent being self-employed.

The shadow Chief Secretary, Rachel Reeves, called for details of which ministers agreed the arrangements. She also called for transparency about the tax arrangements of bankers in publicly owned lenders.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible