The sulphurous whiff of possible IR35-dodging in Whitehall refuses to die down, as Treasury officials confirm their belief that the number of civil servants paid as directors of limited companies may be in the region of 100 and not 25 as previously reported.
The Financial Times reports that the UK tax authority is about to launch a tax avoidance crackdown and has expanded its staff to investigate potential breaches of IR35 in both public and private sectors. If there are times when it feels good to be a humble PAYE umbrella contractor, secure in the knowledge that all tax and NI contributions are up to date and paid, this is surely one of them.
A spokesperson for HMRC said that while many people work through personal service companies for a variety of reasons, “where the arrangement is really only a way of avoiding PAYE tax and national insurance, then the law says the service company must pay the PAYE and national insurance to us on behalf of the individual at the end of the year.”
In the wake of the Lester revelations, Treasury Chief Secretary Danny Alexander ordered a cross-Whitehall investigation. Government officials have just reported, confirming that the number of civil servants being paid through limited companies is four times the number previously identified.
Prominent tax specialist John Whiting explained that the charge of tax avoidance “doesn’t apply to someone doing a day here and a day there and working for several clients.”
He added: “ But where you have someone working half-time for one organisation and for say six months, or a couple of years, they’re bang to rights.”