Tax-Dodging Civil Servants Face Sack
Top civil servants who are dodging tax by paying themselves through a company are to face the sack unless they agree to pay up in full.
An inquiry ordered by Treasury Chief Secretary Danny Alexander has found more than 2,000 Whitehall civil servants and quango chiefs benefit from pay deals that allow them to slash personal tax bills.
Mr Alexander now plans to launch a crackdown which will include dismissal for any of these tax avoiders if they fail to pay their income tax in the normal way within three months.
The inquiry was ordered after it was revealed that Ed Lester, boss of the Student Loans Company, was avoiding tax by paying himself through a private company.
Mr Alexander disclosed the scale of the tax avoidance and his plans to stamp it out in a letter to Chancellor George Osborne, seen by Sky News.
Treasury insiders have told Sky News they were surprised at the high number of civil servants and quango bosses avoiding tax in this way.
Under the proposed crackdown, all those on six-month-plus "off-payroll" contracts earning in excess of £220 a day will have to prove they are paying income tax and National Insurance (NI) in full. If they are unable to, they will be sacked.
Due to be in force within three months, the regime will also include sanctions for non-compliant departments and agencies, including budget cuts of up to five times the salaries concerned.
"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," Mr Alexander wrote.
"Departments have provided the Treasury with information in relation to all individuals engaged off-payroll - for payment in excess of £58,200.
"Of more than 2,000 such people identified, 1,500 are paid more than £380 a day. At least 1,600 people have been working for their departments for more than six months.
"Of these, 1,200 have been working for in excess of a year. And 800 of them have been working for at least two years."
While it would be disproportionate to ban all such contracts in future, there had to be "strict rules" on the tax arrangements of senior public officials, he said.
Mr Alexander said it should be "a priority to put in place strict rules which ensure that the tax arrangements of the most senior public sector appointees are not open to question".
Off-payroll contracts should only in future be used in "exceptional" cases - such as IT specialists brought in on short-term projects - and last less than six months, he said.
And anyone on them - including existing deals - should be required to give assurances they are paying tax and NI in full or have their contracts terminated.
In the letter, dated last week and inviting responses by May 3, he also suggested some details of the findings of the review should be published.
Although the 2,000 cases uncovered by the Treasury inquiry do not include local government officials, town halls have been told to adopt a similar approach and the Treasury also wants it extended to the NHS and the school system.
Treasury sources insist the Government has acted swiftly to deal with the tax dodging after Mr Lester's arrangements were revealed.
"This went on under Labour, who saw nothing wrong with it, which is typical of their approach to tax fairness," said an insider.
"We are wasting no time finding out the scale of the problem and dealing with it."
The extent of the use of the contracts also surprised the chairwoman of the Commons public accounts committee, Labour MP Margaret Hodge.
She told investigative journalism website Exaro: "I am absolutely shocked that what was seen as a rogue case appears to be commonplace across the whole of the civil service.
"Danny Alexander has promised that our committee will receive a full report and we intend to interrogate vigorously the worst offenders. It does appear that he is taking the right steps to deal with this."
what do you think?
Blimey the rats are finally being chased from their nests .. While there are about it root out all the crafty public servants who are cheating this country left right and centre . The country would be free of its debt if everyone paid their dues , not just us private sector wallahs .
The "private sector wallahs" who invented this scam? The same ones who the government has insisted be imported into the public sector so as to introduce (hah!) "private sector efficiencies"? You're clueless.
Private sector are the reall workers in this country. Public sector are money grabbing, gravy train riding, oxygen stealing *****. with thier huge pensions and their 3 monts sick pay. What a disgrace. Theyt dopn't "serve" the public they abuse and fleece them. Bring in the private sector everywhere and sack the lot of the Public S*u*bags.
I am all for the civil servants being removed from their jobs and not being replaced. That way the private sector self employed tax dodgers will have to pay more tax to rectify the deficiency. Remember - civil servants (workers) are all on PAYE, they don't succeed in claiming back for fuel or uniform or protective clothing etc etc that the private sector self employed tax dodgers seem able to do!
I'm not self employed, but yes, I work in the private sector and I do claim for things like bed and breakfast costs if I'm working away from home and get a lunch allowance (£2.50)....but then I don't get a pension...You seem to think only private sector can succesfully claim for "uniform", etc......err so what was all that hoo-hah about the Politicians expenses scandal?.....What gets me is some (not all) PS workers think they are the only ones getting hit in the pocket and are hard done by...truth is we ALL are and the sooner they get over themselves and bite the bullet with the rest of us, the sooner we can get this country from it's knees and back on it's feet!!
every person and busienss shoudl be taxed separately and on a year by year basis with no back allwoances allowed.
Everyone except the high and mighty is! Had it been one of us they would throw away the key.
Everyone shocked, what a joke. Hope they pay past tax that has been avoided.
how many more will get away with this sack them all
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These parasitic senior civil servants have been creaming it off at the top whilst implementing CONDEM policies that make the rest of us suffer. Top of the pile is Ed Lester, boss of the Student Loansd Company, what a disgrace. He is caning it in while presiding over millions of pounds worth of debt for students, debts that certainly are deterring tens of thousands of working class students from a higher education, which should be a right, not a privilege. The whole system, from head to foot, from the banks and the financial sector, the police and the politicians, is corrupt. That's why we need a new socialist party to speak for the millions.
and you think socialists are any better? look at all the socialist governments around the world and you will see just as much corruption.
Ed Lester - whose salary arrangements were vetted and agreed by Condem minister David Willetts...
Socialism is communism light. You may want it but according to the last election result the majority don't. You lost, get used to it. Bring back Saint Maggie, shell sort out all you good for nothings.
Hey Chris. Do you know how you can tell an honest politician? They have hair growing on the palms of their hands.
Backdated, of course :)
And these people go on strike? They just don't get it these public sector lot do they?
No, "these people" DON'T go on stike - they're the same sort of self-serving scumbag that run many UK businesses. The poor sods that work for them - like me - are the people that go on stike...
Oh - and they're no more "public sector" by instinct or behaviour than Ruprt Murdoch: this is private sector practice being imported into the public sector (behaviour the government is all for, remember - it's "more efficient"), and nothing whatsoever to do with how the public sector really is. Still, don't let the truth get in the way of your infantile point-scoring...
Well said Lorgar. Tax sucking leaches the lot of them. Public sector oxygen stealers. Unbelievable, some get caught and suddenly they are not public sector workers anymore. Amazing how lefties fool themselves. Still, they dont like the truth to get in the way.
t'would appear that Lorgar has failed to read the bulletin - they are private sector employees working in the public sector - because they were very senior skivving servants they were allowed to do this. Any old worker isn't allowed to do this, however it's the any old worker who has been going on strike to protect their original terms and conditions and stop the private sector practices!
Lorgar, you've got it so WRONG. These are 'your lot'. SENIOR civil servants who earn £58,000 and upwards. Not the PCS members who will only get pensions between £6,000 - £8,000 which is why they are striking. None of these corrupt lot would ever consider joining a union - unless they wanted to spy on activists. So, Lorgar, you've scored a spectacular OWN GOAL
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If a civil servant is paid through a company, he should not receive a civil service pension when he retires. His pension should either be a matter for his company or himself through a company or personal pension scheme.
Iv;e got a better idea instead of telling us these grand plans we've all heard before. Why don't they be more credible and tell us when they've been implemented.
hope they're going to deal with all the politician's who do the same thing in the same way and sack them too!!!!!
Name and shame them regardless of what they decide and they should not be given that luxury; tax evasion is a crime.
...UP THE WORKER (WHOEVER HE/SHE IS )
Is this really happening? Surely not!
Dont lets kid ourselves that this has 'only just come to light'! This has been going on for years among top government officials, and civil service 'Mandarins'! The reason Alexander has been forced by Osborne to 'appear' to be doing something about it is because Ken Livingstone exposed the practice during a radio interview about the London Mayoral elections. Boris Johnson almost burst a blood vessel trying to deny he knew anything about such things, although that would be kind of impossible to believe with his levels of Civil Service contact. It has always been a little sweetner for the 'in' crowd of 'consultants' on these Off-Payroll up to £150,000 a year contracts, most of wich only require 2 or 3 hours work a couple of times a week. A bit like the top politicians places on half a dozen boards of Company's whose meetings they never attend but who pay them retainers 'for nothing really, just because we think they're awfully nice'... and they hung poor old Turpin??
At least Turpin had the decency to wear a mask while stole................
Of course if Liebour were in power this wouldn't happen would it.
It is not clear whether or not civil servants being paid in this way receive a public service pension. Can someone clarify this. In practice they should receive a pension from the Company through which they are avoiding tax as they are not government employees
They shouldn't just pay up in full, but interest should be levied on their back taxes. If they are sacked because they won't pay, stop their pensions.
if they dont pay send them to prision for tax evasion the goverment would do it to the low paid workers but lets face it again the rich gets richer and the poor gets poorer and all at the working man/womans expense