Civil Servants paid off payroll for over 10 years will not be named

Chief Secretary to the Treasury Danny Alexander is due to announce today that dozens of civil servants who have been avoiding paying their fair share of tax for over a decade will not be named.

It is estimated that more than 2,000 officials could be minimising their tax by being paid their salary off the Government payroll, with “dozens” having been paid that way for over 10 years.

 The announcement will raise questions about why ministers from all parties have allowed the arrangement to continue for so long.

Mr Alexander will announce the results of a Whitehall review which found that 2,000 senior public officials on over £58,200 a year were found to be paid “off payroll” with more than half being paid through employment agencies whilst working for Government bodies.

Of more than 2,000 such people identified, 1,500 are paid more than £380 a day. Mr Alexander will say that he will publish the job titles and length of contracts of all the officials, although data protection rules mean he cannot publish their names.

The final 2,000 figure is likely to be an under-estimate as the review did not include employees in the National Health Service or local authorities.

Sources close to the minister said he was keen for other parts of Government, in particular the BBC, to publish similar details about payments to contractors.

The probe was ordered by Mr Alexander after the Exaro News website disclosed in February that the head of the Student Loans Company Ed Lester had negotiated a deal to be paid through a private company.  The deal was estimated to allow Mr Lester to save up to £40,000 in tax by being paid through a service company, allowing him to pay only 21% tax on his earnings rather than 50% in income tax.

In a letter to a Cabinet committee earlier this month, Mr Alexander said officials and ministers had under-estimated the scale of the problem.

He said: “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 will tell MPs today that any civil servant who is paid off the payroll will have to prove that they are paying their fair share of tax by September.

The new crackdown will force any official who is not on the pay roll, has been employed for more than six months and is paid over £220 to prove that they are paying their fair share of tax.

If they cannot prove they are paying the same income tax and National Insurance Contributions as an employee, they will have their contracts terminated.

A Treasury Spokesman said last night: “The Chief Secretary will publish in Parliament tomorrow the Review of Tax Arrangements of Public Sector Appointees.

“The review looked into the extent of payroll arrangements which could allow public sector employees to minimise their tax payments and will outline new rules to increase transparency in this area.”


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