We recently reported on the scandal of the Student Loans Company’s Chief Exec, Ed Lester, who was given official sanction to save himself £26,000 in unpaid tax and national insurance by filtering his lucrative pay deal through a personal service company. Now it has emerged that he was far from being the only beneficiary of such arrangements.

The Guardian newspaper has found evidence that getting paid through limited companies is not a rarity at the Department of Health – 25 senior figures are dealing with their income in this way, with nineteen of them commanding annual salaries in excess of £100,000.

It is not the use of limited companies per se that is raising eyebrows. Rather, it is the kind of ‘old school tie’ nodding and winking that has understandably outraged many PAYE umbrella contractors, who pay their tax and NI dues honestly and efficiently as they earn.

A spokesman from the DoH sought to limit the damage, saying that the DoH “can confirm that no civil servant who is an employee of the Department of Health is paid in this way.”

PCG Chairman Chris Bryce has moved to cool the outrage, however, warning against creating an “orchestrated witch-hunt against the nation’s smallest businesses.” He said:

“The Government is right to look closely at how public servants are being remunerated and where there is disguised employment or tax evasion it should be stopped and fully investigated by HMRC. However, it is fundamentally inaccurate to brand all one-person limited companies as employees attempting to avoid tax.”

“We should ensure those rushing to attack limited companies don’t trample the only green shoots of recovery we have seen for quite a time – freelancers.”

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