‘Considerable incentive’ to operate through a limited company remains
Tax avoidance in the public sector goes much wider than civil servants, Margaret Hodge said as the Public Accounts Committee published its findings on ‘off-payroll arrangements’. Avoiding tax and national insurance when paying public sector staff was ‘almost always staggeringly inappropriate’, she warned.
Hodge, the committee’s chairman, said she and her colleagues were ‘shocked’ to discover that the BBC has ‘about 25,000 off-payroll contracts, 13,000 of [which] are for individuals who are on our screens and on the radio every day’.
Eighteen months ago the Office of Tax Simplification told the chancellor that there was ‘still a considerable incentive [for workers] to operate through a limited company and receive dividends [instead of salary]’.
Experts point out that in some cases there are valid non-tax reasons for incorporation, such as the need for limited liability. Prospective 'clients' sometimes require a worker to operate via a limited company.
But Hodge said the public sector ‘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’.
The BBC said it intended to review its arrangements, Hodge added. ‘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.’
John Whiting, tax policy director at the Chartered Institute of Taxation, told the BBC’s Today programme that some workers might make their own tax arrangements for perfectly legitimate reasons.
‘If you are just an ordinary freelancer, which is very prevalent these days – anyone from a plumber to journalist – working here and there, working through a company, then it is a perfectly sensible way of organising your affairs,’ he said. ‘What this report is targeting are people who are in “disguised employment”.’
The BBC News website quoted Whiting as saying that the PAC report said IR35, the long-established anti-avoidance provision, was ‘not that easy to apply’. It was not being applied in as many situations as it could be, so that ‘people have been getting away with it’.
The report added that the BBC said the actual number of people who were not paying tax at source was ‘far smaller’ than the figures suggested: ‘In a statement, the broadcaster said: “In many cases an individual – such as an occasional contributor to programmes – could be issued with a contract each time he or she is booked to appear.”'
‘Considerable incentive’ to operate through a limited company remains
Tax avoidance in the public sector goes much wider than civil servants, Margaret Hodge said as the Public Accounts Committee published its findings on ‘off-payroll arrangements’. Avoiding tax and national insurance when paying public sector staff was ‘almost always staggeringly inappropriate’, she warned.
Hodge, the committee’s chairman, said she and her colleagues were ‘shocked’ to discover that the BBC has ‘about 25,000 off-payroll contracts, 13,000 of [which] are for individuals who are on our screens and on the radio every day’.
Eighteen months ago the Office of Tax Simplification told the chancellor that there was ‘still a considerable incentive [for workers] to operate through a limited company and receive dividends [instead of salary]’.
Experts point out that in some cases there are valid non-tax reasons for incorporation, such as the need for limited liability. Prospective 'clients' sometimes require a worker to operate via a limited company.
But Hodge said the public sector ‘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’.
The BBC said it intended to review its arrangements, Hodge added. ‘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.’
John Whiting, tax policy director at the Chartered Institute of Taxation, told the BBC’s Today programme that some workers might make their own tax arrangements for perfectly legitimate reasons.
‘If you are just an ordinary freelancer, which is very prevalent these days – anyone from a plumber to journalist – working here and there, working through a company, then it is a perfectly sensible way of organising your affairs,’ he said. ‘What this report is targeting are people who are in “disguised employment”.’
The BBC News website quoted Whiting as saying that the PAC report said IR35, the long-established anti-avoidance provision, was ‘not that easy to apply’. It was not being applied in as many situations as it could be, so that ‘people have been getting away with it’.
The report added that the BBC said the actual number of people who were not paying tax at source was ‘far smaller’ than the figures suggested: ‘In a statement, the broadcaster said: “In many cases an individual – such as an occasional contributor to programmes – could be issued with a contract each time he or she is booked to appear.”'
