Two thousand 'off payroll' senior civil servants

Discussion in 'Current Affairs, News and Analysis' started by Blogg, May 2, 2012.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. "An official investigation found large scale tax avoidance among senior bureaucrats, prompting the massive crackdown by Mr Alexander.

    In all, 2,000 senior public officials on more than £58,200 were found to be paid “off payroll”, which could minimise their tax bills, according to a leaked letter obtained by Exaro, the investigative website and the BBC's Newsnight programme.

    They are paid through service companies, or through employment agencies. The amount of tax legally avoided could run into tens of millions of pounds.

    In the letter, Mr Alexander said: “The sheer scale of off-payroll engagements across government, and the length and size of these contracts, suggests that the scope for artificial tax minimisation may be greater than previously understood.”

    Two thousand 'off payroll' senior civil servants forced to prove they are not tax dodgers - Telegraph

    Not by me, matey. Long been clear that these iffy contractual arrangements were rife. Excluding the NHS and Local Government, so the real figure will be a lot higher.

    Just wondering how many HMRC types will be shown to have been on these "arrangements".
  2. Mr_Fingerz

    Mr_Fingerz LE Book Reviewer

    I wouldn't be at all suprised to learn that at least half of the Commissioners were being paid in this manner. However, you have to bear in mind that such arrangements are completely legal (if not moral). Further, they (the employees/contractors/callthemwhatyouwill) also bear the cost of both employer and employees NI contributions. It will cost an absolute fortune to cancel and re-negotiate contracts. Compensation will have to be paid for legal contracts that have been negated by the Govt because it's now politically inconvenient.

    The Govt won't recover anywhere near the amount that is being avoided through these schemes.

    Tax avoidance = Legal if not moral
    Tax evasion = Time in gaol.
  3. It will be interesting to see how the MOD fares in this debacle. Of course, if staff are paid like this then they are paid out of a different budget. But then they aren't "staff" are they? They are contractors. And there should be a clause in their contract which says "no more work for you, hand in your pass on the way out...".

  4. Without knowing the details of what these people are doing, and their individual contractual arrangements, there's nothing preventing HMRC instituting tax investigations.

    Gross company earnings can be caught under "IR35" and (in effect) be retrospectively treated in a PAYE manner. And HMRC can go back 7 years... we'll pass over the penalties that can be applied to the unpaid tax.
    • Like Like x 1
  5. I was wondering how that added up. Unless they're legitimately doing all sorts of other things with the company, I'd have thought they'd be in the IR35 trap already.
  6. seaweed

    seaweed LE Book Reviewer

    Osborne's mouthings in the Commons sound sillier day by day. Trying to tar the 'fat cats' with this practice (as pointed out above, entirely legal) when his own civil servants were at it as well.

    Sir Humphrey would have got in there before the budget speech: 'Actually, Chancellor, there may be a slight presentational problem ..'
  7. A lot of these used to be 'the great and good' who were invited to sit on lots of boards and so had lots of little high paid jobs. To make it easier to group their earnings together for tax calculation they often set up limited companies of which they were directors. The Ltd co would invoice for their 'services' and they would channel those through their own company and take a single basic salary, (some smarter ones took it as dividends.) directors being 'employees' of their own companies.

    It sounds like the practice has spread since my time. Still legal, as Fingerz says, but an unhealthy practice. I would love to know how many of these were appointees of the previous government.It doesn't include the NHS or Local Authorities either.

    Now there's a few areas ripe for a good going over.
  8. I was aware of quite a few FCO senior staff who flew in from France for work on Monday mornings and disappeared back again on Fridays. No doubt this practice was rife throughout the Civil Service. Oddly, delegated staff (ie junior ones) weren't allowed to do it ... :hmm:
  9. Seeing as how that would of made no difference to their UK tax position what's your point?
  10. it's just like all those dodgy squaddies who decide to live in Germany or Afghanistan to avoid tax... ;-)
  11. "Two thousand 'off payroll' senior civil servants ............In all, 2,000 senior public officials on more than £58,200"

    £58k ? They are not that senior then are they? Suspect the majority of these are IT contractors and business consultants - all of whom should beswept up by IR35 provisions. The management consultants will be particularly essential as they promote modulated behaviours vis a vis the coordination of sensory cue information to mediate or modify the corporate physiological repertoire

    Most of these low end ones will be on genuine 6 month or 12 month contracts. The ones to concenrate on are those that are in effect permananent employees on far higher salries and running departments like the first bloke they highlighted (the one associated with Student Loans).

    Frightening how effective these NIC fiddles are though - BBC News last night reckoned if the 2,000 people were all on £58k, and many will get more, then its costing Gideon £16m a year lost NIC
  12. There was quite a cull after the election in the Dept I face of too. They've soon found their way back though. There are 3 more than there were in 2009 in the team I work with. Team size has actually shrunk as theyve laid permanent staff off
  13. Wordsmith

    Wordsmith LE Book Reviewer

    The situation depends on the nature of their jobs.

    If they're IT people on a short term contract, that's absolutely fine.

    If they're effectively career civil servants who are saving on tax by these arrangements, they should be forced to cough up all the back tax they should have paid.


  14. Mr_Fingerz

    Mr_Fingerz LE Book Reviewer

    Why? The arrangements are perfectly legal. SCS tend to fall into the top tax bracket anyway, and tax avoidance is a way of life for most (if not all) people in that bracket. They pay the tax that they are supposed to pay, not a penny more.

    I'm not saying that they are right to avoid tax, but they (and everyone else) have the right to avoid tax.
  15. My point was that those members of the SMS (senior management structure) who lived abroad had different arrangements with the FCO to junior staff who had to have their salaries paid into a British location. Whether or not the senior staff were able to take a tax advantage of this, I don't know, but there was discrimination between higher and lower grades. But my experiences in this were gained about 13 years ago - things may have changed since then but, apparently, not for the better.