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

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

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

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there