Danny Alexander: Public sector workers should hold highest tax standards

Monday 28 July 2014

Contractors in the public sector should maintain the highest standards when it comes to complying with tax law, according to chief secretary to the Treasury Danny Alexander.

Speaking to The Telegraph, he said: "It’s right that those who work in the public sector uphold the highest standards when it comes to their tax affairs."

This statement came amid reports that dozens of NHS executives may face investigation by HM Revenue and Customs (HMRC) if they refuse to answer questions about their tax arrangements.

Contracting is becoming a popular and accepted way of working in the public sector, as long as it is done transparently.

It has come to light, however, that 86 senior health service officials paid off-payroll have refused to give assurances to their employers that they are paying the correct level of income tax and national insurance.

The Treasury is now looking for their names to be handed to HMRC for investigation.

Mr Alexander commented to The Telegraph: "The rules I brought in two years ago make clear that where people have failed to provide satisfactory assurance of their tax affairs, their details must be passed to HMRC."

Both public and private sector workers that are off-payroll are now required to prove that they are in actual fact contractors and not trying to disguise employment. This is part of personal service company legislation.

Stars at the BBC have also been affected by the changes to the law and in January of this year it was revealed by The Telegraph that presenters such as Jeremy Paxman and Fiona Bruce could be forced to stop working as freelancers.

This would require them to take a pay cut of up to 25 per cent in return for employee benefits, such as holiday pay and pension contributions.

The stars came under fire after the BBC was criticised for employing too many people through personal service companies - an allegation the NHS has also been faced with.

Agents of the presenters have tried to put up a fight against the broadcaster, which has looked to move its stars on payroll.

Speaking to the newspaper, the agent of one presenter said: "The BBC’s angle is that it has all got to be cost-neutral to them. Our angle as agents is that it’s got to be cost-neutral to the client – that is where they are going to hit an impasse.

"A lot of us agents are getting together to present a united front. One thing that we are agreed on is we are not taking this lying down on behalf of our clients."

The use of personal service companies continues to be a contentious issue and the government has received criticism from the House of Lords Select Committee over it's approach to policy.

Following a report on personal service companies created by the committee, the coalition was accused of failing to give a proper response.

"I cannot pretend that the government's response to any of our recommendations was encouraging," Baroness Noakes, chair of the committee, wrote. "I do not think that the Treasury has shown any interest in finding out the full extent of the use of intermediaries or indeed in compliance with the government’s own rules."

By Victoria McDonnell

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