There’s one rule for the rich and another for everyone else

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The furore about the use of a personal service company to supply the services of the director of the Student Loan Company is appropriate.

It is virtually impossible to see how this man should not have been on PAYE at source: he was very clearly in a master /servant relationship under a contract for service and as such what was called Schedule E tax has to apply.

But it didn’t. He is likely to have taken part in three tax avoidance activities:

a) He has transferred his income to a third party (the company) to save tax

b) He has probably recategorised the income as investment income (a dividend from the company) to save the tax due on employment

c) He may have deferred paying himself the income to delay paying tax.

The IR35 rules should have stopped this. They did not.

Graham Aaranson’s general anti-avoidance principle won’t go anywhere near it.

No normal employee would be allowed it.

Sp the real question is, why was a boss? Why was a special arrangement made for a person on high income unavailable to the rest? What is this bias towards abuse being seen yet again in HMRC towards those with wealth?

If HMRC did approve this then heads should roll, again. Not because it is a personal service company; they happen, but because this arrange should never have been approved.