8th October 2012 - Business News

MPs concerned about ‘off payroll’ tax arrangements

The Public Accounts Committee have criticised the tax arrangements of some public sector workers.

The MPs say that too many make their own arrangements to pay tax and national insurance, which could allow them to contribute less.

“Avoiding tax and national insurance when paying public sector staff is almost always staggeringly inappropriate,”

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

“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.

“Those whose income is derived from monies raised through taxation have a particular obligation to make sure that they do not use tax avoidance schemes.

“We welcome the prompt response by the Treasury following revelations about the appointment of the Chief Executive of the Student Loans Company through a personal service company. But it is of great concern to learn that no part of government – including the Treasury – Cabinet Office and HMRC – had properly challenged that appointment.

“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.”

The MPs were shocked to learn that the BBC had 25,000 such “off payroll” contracts – 13,000 for people who were on air.

“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.”

 

Source.