MPs slam public sector PAYE arrangements

October 9th, 2012  |  Published in Uncategorized

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts,  said:


 Avoiding tax and national insurance when paying public sector staff is almost always staggeringly inappropriate.
The public sector must maintain the highest standards of propriety in its employment practices if it is to show leadership in the fight against tax avoidance. It must avoid the practice of using off-payroll arrangements for staff who should be on the payroll – a practice which generates suspicions of complicity in tax avoidance and which fails to meet the standards expected of public officials.

It was also shocking to find out that no fewer than 2,400 central government appointees were benefiting from off-payroll arrangements. Furthermore, the Treasury Review only covered civil servants. Tax avoidance in the public sector goes much wider.
We were shocked, for example, to discover that the BBC has about 25,000 off-payroll contracts. 13,000 of these are for individuals who are on our screens and on the radio every day. They are the public face of the BBC.
It told us that it intends to review these arrangements. We want the review to explain how the BBC will gain assurance that the staff involved are paying the correct amount of tax on their income from the public purse. Similarly we suspect that many individuals and employers in local government and in the health service do not pay their proper tax and national insurance contributions.

According to figures circulated by Bloomsbury Professional, however, both the Treasury review and the PAC failed to notice that the tax department has taken a renewed interest in IR35 cases over the past year or so. IR35 produced £1.25m in yield in 2011-1, compared to just £219,000 the previous year, Bloomsbury noted. The number of investigations more than doubled to 59 in 2011-12.

“It looks like HMRC has been playing catch-up on IR35 in the past year. They’ve gone from almost ignoring IR35 breaches to getting tough around the time that the public sector personal service company scandal began to break,” commented Bloomsbury Professional managing director Martin Casimir.  (source: Accountingweb)

If you are worried about being paid through a company when you regard yourself as an employee, or an employer worried that your arrangements may cross the line, get in touch with us for a discussion.


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