March 11, 2014 7:55 pm

Environment and transport breach ‘off payroll’ tax rules

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A probe into the tax affairs of civil servants employed “off payroll” has culminated with penalties on the environment and transport departments.

A cross-government review found 125 instances – 6 per cent of those examined – where government contractors had been unable to explain their tax affairs. The Treasury said the “overwhelming majority” of public bodies were following the rules.

The review followed a 2012 crackdown on government employees who minimised income tax and national insurance by receiving their pay through private companies.

The new rules blocked off-payroll contracts for senior long-term appointments, and required all government contractors employed for more than six months to provide assurances that their tax affairs were in order.

A breach of the rules was uncovered at the environment department’s Animal Health and Veterinary Laboratories Agency. Two cases were identified at Directly Operated Railway Ltd, a transport department body.

Separately, Danny Alexander, chief secretary to the Treasury, said he had already asked Jeremy Hunt, health secretary, to conduct a full investigation into all senior off-payroll NHS appointments “to ensure that all employers are taking adequate action to prevent possible tax avoidance”.

Health officials said the two bodies that regulate hospitals, the Trust Development Authority and Monitor, had been asked by the department to begin work on an inquiry into tax arrangements last summer.

The department said: “The government has been clear that tax avoidance will not be tolerated; there is no excuse for it in the NHS, or any other part of the public sector.” The TDA and Monitor had been charged with investigating “current arrangements in the NHS and inform[ing] us of any cases where it appears that [NHS England chief executive] Sir David Nicholson’s guidance on interim board appointments has not been followed.”

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