Parliament's Public Affairs Committee (easily the most effective committee ion the House of Commons right now) has a new report out this morning on Off-payroll arrangements in the public sector. It looks at the 2,400 or so people on such arrangements in central government. It looks at the 25,000 or so on such arrangements at the BBC and it suggests that throughout the NHS and local government and other agencies there will be thousands more.
They do a great job in making clear that these arrangements - many, but not all - of which will be straightforward tax abuse are wholly unacceptable.
And they point out that when H M Revenue & Customs only has the resources to check 23 such cases in 2010-11 then there is absolutely no effective deterrent to such arrangements, which are of course even more common in the private sector - where they are just as abusive. The rules are the same for all - lest we forget.
No one is saying, unfortunately, that the answer to this is to radically transform the way all small business is taxed so that tax abuse is not part of the small business culture. That's the elephant people won't look at. I have. It's time my suggestions were looked at seriously by the Treasury again - they were in 2008.
But let's also be clear what this means: it means that the culture of tax cheating that is destroying the enterprise culture of the UK's private sector is permeating the public sector. It's a cancer that is undermining trust, a level playing field and confidence that we are all in this together. Clearly we're not when these arrangements are largely reserved for the more highly paid.
There are, of course, some people who work for the BBC who are self employed - the lighting camera man who filmed me recently who supplied all his own equipment, for example. But there are many who are not, who do the same job day in and day out. Yes, they may have other earnings as well. So what? Those other earnings are freelance. Their work for the BBC is not.
This cancer has to be cut out.
But it will only happen if we do three things.
The first is we have to say paying tax is the right thing to do.
The second is to give HMRC the resources to stop this abuse - and right now the government is sacking the people who do it.
Third we have to ensure the small companies owned by freelancers pay - and right now we don't do that either.
No wonder we have a massive tax gap in this country.
That's a choice by government - the wrong choice - and it is they who have to be blamed most of all.
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I think we need to make a distinction between working folk who use self-employment to keep more of their earnings than they could under PAYE (which I seem to recall was a purely temporary measure introduced to pay for the last big war – what a scam, eh?) and those who stash their cash away in tax havens. The problem with tax haven money is it’s effectively withdrawn from circulation where it’s needed. Someone on self-employment though may well be spending the extra they get to keep into their local economies, enriching their localities in the process. They’d also be paying taxes when they buy things unless they’re limiting their purchases to children’s clothing and food etc. I see nothing wrong with individuals wanting to retain control over the purchasing power their labours generate as opposed to surrending it to government. The government still gets to receive plenty of taxes this way. It’s when money’s tucked away out of circulation we all suffer. Going after the big tax havens is laudable but I don’t believe going after working folk will prove popular or sensible if as I say they’re spending their earnings anyway.
We do make that distinction
One is avoidance
The other evasion
there is a lot of this going on in the medical profession – doctors being engaged by the same company for more than 4 days a week earning £80k plus and yet claiming to be self employed.
I know – not acceptable there either
No idea why it is allowed
How would you address it though? If we suggest hospitals require anyone working for them on more than a two day a week basis, say, to be on PAYE it will simply result in lots of doctors refusing to work more than two days a week at any one hospital. If they agreed, the results would be a great deal more adminsitration for hospitals eating further into their skimpy PFI-debt laden budgets plus they’d have to be paying employers insurance etc.This would be a bit of a merry-go-round. Doctors’ fees would obviously go up a lot to compensate… I’m not sure how there’d be savings here.
The vast majority of hospital doctors are on PAYE
It is most GPs who aren’t
They should be
Declaration: my wife is a GP
I suggest the only way to tackle this abuse is to neutralise the advantage that accrues to persons using ‘off payroll arrangements’. Part of this process should be to phase out the payroll tax knowns as Employers NICs. Form any political perspective, this must be the worst tax imaginable, acting as a major disincentive to employment. It should not be impossible to achieve cross-party consensus about the negative effects of this tax and find a way of replacing it with less harmful taxes over the next decade.
No, the answer is a tax on those receiving investment income
well jersey’s been busy with its pay roll companies, reducing people from outside the island’s tax liabilities i,e income tax & national insurance then getting loans from offshore trusts with no time to pay the money back, legal loophole or some dodgy tax planning
Over the last 48 hours there has been a lot of media noise over the, so called, ‘off payroll arrangements in the public sector’ with a particular focus on shenanigans in the BBC. I don’t care what Anthony Nolan thinks, this is at best a ‘dodgy arrangement’ even if, to quote Mickey Clarke’s new catchphrase, ‘it’s all perfectly legal’. Such a secret arrangement, because we don’t know the names of BBC staff involved but it won’t be the caterers, clearly threatens Editorial and Presenter impartiality. Turkeys don’t vote for Xmas, nor are they likely to talk it up on the radio. I want to be sure, before listening to the opinions of the likes of Nolan, Clarke, and Bacon, that they are paid via PAYE before I give their views any credence.