No sooner has the furore surrounding Mr Lester died down, it now transpires that the Department of Health has been paying 25 senior members of staff through limited companies. In fact more than £4 million has been paid out in this way.
While the Revenue has been busy tracking down IT contractors caught up in IR35 legislation, senior employees in the Government have slipped through the net, saving themselves vast amounts of National Insurance and income tax in the process.
It is not uncommon for senior executives in the private sector to get a three-year rolling contract and receive payment through a limited company. This trend now seems to have spread to the public sector as well.
The Department of Health is in denial, saying that the individuals concerned are genuine contractors despite the fact that some of them have worked for the Department for several years. Could it be that the Government was struggling to attract top talent and this ruse was the only way they could justify paying them more money? Remembering that the ‘employer’ does not need to pay the employers NI contributions of contractors, this could well be feasible.
But the fact remains that HMRC has been keen to force IR35 onto the contracting community and all the while, senior Government staff have been doing exactly what the Revenue is trying to stop! Are we going to see more departments emerge with egg on their face?
David Cameron says he wants more transparency in the Government. It seems there’s a long way to go before that becomes a reality!
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