Top-earning public sector chiefs in Norfolk and Suffolk are being paid through schemes which generate “suspicions of complicity in tax avoidance”.

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An EDP investigation shows 79 people earning more than £220 a day – the equivalent of £57,000 a year – were paid off-payroll by hospitals and councils in the two counties in the last two years.

This practice was criticised by the Public Accounts Committee in relation to the BBC for generating “suspicions of complicity in tax avoidance’’.

But months after NHS trusts were warned to stop the practice, managers continue to be paid off the books.

Under the scheme, the individuals are engaged as self-employed contractors. Tax is not taken from the contractors’ fees when they are paid. Instead the contractor is responsible for declaring their tax later on. And they are able to pay themselves through dividends to reduce their own tax bill.

Hospitals were told in August by Sir David Nicholson, NHS chief executive in England, to stop paying managers off the books.

He said board members and senior officials contracted for more than six months should be paid in the normal way.

But the EDP’s investigation, made using the Freedom of Information Act, shows that despite the warning, highly paid individuals are still being paid through the arrangements, and in some cases no reassurances are being sought by the organisations that they are paying tax.

At West Suffolk Hospital Trust where 35 people have been paid off-payroll in two years, 21 had not declared to the hospital that they were responsible for their own tax arrangements. And 12 were still being paid off the books months after Sir David Nicholson’s warning.

And at Norfolk and Suffolk Foundation Trust three people contracted since 2010, are still being paid off-payroll.

Health minister and North Norfolk MP Norman Lamb said: “Sir David Nicholson sent out a very clear message back in the summer and trusts need to take that very seriously and act upon it. There are occasions when it makes sense to bring somebody in on a short term basis, but the impression one gets is of an ongoing arrangement in too many cases where the appropriate relationship should be one of employer and employee paying tax in the same way as anybody else.”

At Waveney Council one highly-paid worker was paid off-payroll from April 2009 to June last year, while at Suffolk County Council a director was also paid this way for more than two years.

One person at West Suffolk Hospital Trust has been paid off the books for 10 years with no declaration sought that they were responsible for their own tax. Jan Bloomfield, executive director of workforce and communications, said: “There are occasions when we may need to bring in people outside of our normal payroll. We are currently looking at ways in which our processes for seeking assurances regarding tax and National Insurance payments could be improved.”

The JPH is also reviewing how it seeks assurances.

At the Norfolk and Suffolk Foundation Trust eight individuals were paid off books, but the trust said it was confident they paid the right amount of tax.

NHS Suffolk said it had not checked whether their 11 contractors paid off payroll were paying tax, but said they had requested copies of their professional indemnity insurance which they said “implied” they considered themselves to be self-employed.

South Norfolk Council paid 14 people off payroll, but said it was the responsibility of the contractors to make sure the right tax was paid.

Suffolk County Council said it was not responsible for the tax affairs of the interim director. But Waveney Council, where eight people have been paid off the books in the last two years, said it did seek assurances that the right amount of tax was being paid.

There is no suggestion that any of these individuals did not pay the correct amount of tax.

16 comments

  • If they're not paying it presumably the government will repeat what they did for millionaires and give them a tax cut of £100k.

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    Jeffrey Osborne

    Monday, January 7, 2013

  • I find it unlikely that any of these individuals were working as consultants or the like, appointed for a short term assignment before moving on to work elsewhere. If these people are effectively employees of these publc bodies, albeit they have entered into 'unusual' contractual arrangements for tax purposes, they are probably committing tax evasion, and their names and details should be passed to HMRC for investigation leading to prosecution if any serioud offences have been committed. If anyone withholds the details of an offence this is in itself a crime.

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    Police Commissioner ???

    Monday, January 7, 2013

  • If they're not paying it presumably the government will repeat what they did for millionaires and give them a tax cut of £100k.

    Report this comment

    Jeffrey Osborne

    Monday, January 7, 2013

  • Why should these scroungers receive any public services when they do not pay their full share?They are public parasites rather than public servants.

    Report this comment

    Peter Watson

    Monday, January 7, 2013

  • and people wonder why we are in a mess more tax manipulation by people we actually employ and we expect Google Starbucks etc to pay their dues some chance if you ask me if even public servants are at it !!!!!

    Report this comment

    MrB

    Monday, January 7, 2013

  • The governments blatant refusal to stop tax avoidance to certain earners , is saying to those that do pay full tax ... You are fools to vote for us... The encouraged motivated greed that created the financial crisis is alive and well and is given the thumps up to continue by this and past uk governments or is would have be stopped during the past 20 years...those on p.a.y.e have no access to tax avoidance and are cheated into forced tax paying... While high earners laugh their way to their increased bank balances ... And maybe wonder how the poor people are getting on..?

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    Lionel

    Tuesday, January 8, 2013

  • Spot on Stuart.And the irony of this is that these contractors were probably made redundant and their choices for working anywhere at all (and contributing any tax) were limited. In any case, the tax advantages of working outside IR35 for annual fees of £57000 will be minimal, if at all beneficial. CllrJohnCowan and Police are also correct, there are strict rules around these practices and if someone has been doing it for 10 years as mentioned, this is clearly tax evasion.

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    AE

    Tuesday, January 8, 2013

  • Why single them out for special attention when, as a country, we lose far more in revenue by people being paid cash in hand?

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    BG

    Monday, January 7, 2013

  • The rules on IR35 are pretty simple and HMRC are pretty hot on people who break them.

    Report this comment

    CllrJohnCowan

    Monday, January 7, 2013

  • What the report doesn't tell us is do these contractors enjoy the benefits normally associated with permanent employment; paid annual leave, paid sick leave, pension, redundancy terms etc. Normally this wouldn't be the case and if so, the 'drama' behind this story is actually a damp squib. The reported £57000 is only correct if every possible day monday to friday is worked including all bank holidays. Often hiring contract staff is a sensible and economical way of running a business so the trusts may actually be using our money to good effect. (Although anyone doing it for 10 years as per the report is sailing close to the wind).

    Report this comment

    AE

    Monday, January 7, 2013

  • Police. For most people I'd say that conscience enforces the rules. It is interesting that it's generally office-role contractors that get targeted with such public allegations; however it also applies to tradesmen, most of which trade as Ltd companies. When you call your plumber to do some work, do you check their accounting practices to satisfy yourself that your spend isn't being managed to avoid tax? If not, maybe you should if you feel so strongly about it.

    Report this comment

    AE

    Wednesday, January 9, 2013

  • (correction) omnishambles. You really need to get your facts right. It is people earning a million or over about whom you are talking about. Not people whose assets add up to a million which in London must be many, looking at the current house prices in the metropolis. And you are also wrong about the tax situation. Anyone earning a million pounds or more per annum will pay £42,295 less in tax but then again they will also paying £42,295 more than they did under 13 years of Labour.

    Report this comment

    BG

    Monday, January 7, 2013

  • Going back to the 1990s, setting up a limited company and paying through dividends was the way recommended by tax office. When Labour came to power they resurrected a rule called IR35 that clamped down on this practice, even while the tax office was still recommending it. You should note that this figure would be if the person worked 8 hours per day, 260 days a year, as they are NOT paid for public or private holidays. Out of that pay, to avoid IR35, they will pay employers national insurance, employees N.I., personal tax, company tax, accountants fees, V.A.T., etc. If they get any of the paperwork wrong they will be investigated by HMRC and fined. Along with no job security, no redundancy, no sick pay, do you really envy them?

    Report this comment

    So_Many_Haters!

    Tuesday, January 8, 2013

  • omnishambles. You really need to get your facts right. It is people earning a million or over about whom you are rtalking about. Not people whose assets add up to a million which in London must be many, looking at the current house prices in the metropolis. And you are also wrong about the tax situation. Anyone earning a million pounds or more per annum will pay £42,295 less in tax but then again they will also paying £42,295 than they did under 13 years of Labour.

    Report this comment

    BG

    Monday, January 7, 2013

  • Strict rules in theory, but who is there to enforce them? Tory cutbacks have hit HMRC too. All very well Osbo talking tough on cracking-down. And of course someone has to report these fraudsters first. Why is this a scam? Let's say the tax avoider's (evader's?) company 'employs' all of the director's children (at school) and claims staff costs in the company's accounts up to their personal tax allowances (so no PAYE), that's a whole heap of corp tax avoided. And that sort of practice is the tip of the iceberg. These schemes are only as popular as they are because they are wide open to abuse.

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    Police Commissioner ???

    Tuesday, January 8, 2013

  • Will the EDP publish their names or are they frightened as usual ?.

    Report this comment

    "V"

    Monday, January 7, 2013

The views expressed in the above comments do not necessarily reflect the views of this site

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