Apparently Danny Alexander, Chief Secretary to the Treasury, has written to the Chancellor to inform him that there are more than 2,000 senior civil servants using personal service companies rather than being employees.
The barometer used for measuring these figures appears to be those paid at least £58,200.
Margaret Hodge, Labour MP, was shocked by this revelation and said, “This is endemic across the civil service.”
So once again the media and politicians display their ignorance about taxation and, in particular the use of personal service companies. Have they stopped to think that these 2,000 may not be high flying civil servants pursuing a long standing career within the service? They are likely to be contractors engaged on short term contracts by government departments wanting to avoid and discharge their employment obligations. It appears that 40% have been providing their services for more than 2 years, although it is not known if these are single contracts or a number of smaller, renewable ones. If they are contractors, then can they really be classified as civil servants??
It is hypocritical of the government to point the finger at these individuals and accuse them of avoiding tax and NIC's when it is their own departments that have been responsible for hiring these contractors on self-employed terms. They need to take a long hard look at themselves, and maybe they are (?), rather than using contractors as a scapegoat. If they are genuinely concerned then they simply need to seek a ruling from HMRC, then jobs a good un'!
Ah the ill-informed leading the rash, helpful politicians as ever creating a panic and fuss without the facts! These will no doubt be contractors and as they will also be fulfilling either short term roles or roles where the body in question has been given an instruction that they are not able or allowed to make a permanent recruitement to post. This doesn’t mean they’re avoiding anything, the contractor is still paying tax & NI, they just aren’t employees! No wonder we have such issues with IR35 and the like as we constantly seek to assert that we are not employees! A little bit of information is always dangerous.
If 40% have been there over 2 years then they were there under the Labour Government, so surely Margaret Hodge would have been aware of this!
It would be nice if the Government would actually recognise the downside to contracting in addition to any upside.
What I want to know is if any of these have been working at HMRC!
I’d be interested to know if they are in or out of IR35; I would be keen to employ their negotiating skills for me next contract if they are! Seriously though, as senior CS, all of these people will have staff therefore can’t be deemed as outside?