Tax avoidance is OK for civil servants (but not the rest of us)

16 February 2012

top brassIt’s funny isn’t it. Tax avoidance used to be OK (tax evasion is the illegal one) and then it became morally reprehensible. Now, it seems, tax avoidance is flavour of the month again, but only if you are civil service top brass.

Recent reports that the head of the Student Loans Company, Ed Lester, was receiving his six figure salary in the form of untaxed payments into a limited company drew outrage, and Chief Secretary to the Treasury, Danny Alexander, was quick to stamp out the practice, assure us this was a rarity, and an unusual case because Lester was a contractor before becoming an employee. He urged Whitehall departments to unwind similar schemes as quickly as possible, telling the Guardian: "When we all have to pull in the same direction to tackle the country's financial problems it is essential we all pay our full and fair share."

Yesterday, however, the paper revealed a further 25 such head honcho types, this time in the Department of Health, were also using limited companies to (probably) sidestep PAYE and national insurance. The Guardian’s investigation revealed that the single largest non-salary salary payment was £273,375 and that nineteen of the staff are paid more than £100,000. In the majority of payments, the fees were paid to companies with the same address as the home address of the staff member. The Department of Health claims the 25 were not civil servants, or technically even staff, though many have been employed for many years and hold very senior positions. The arrangements, which were first questioned back in December, will now be subject to review by the Treasury.

Today, the head of the senior civil service union, Jonathan Baume, has come out challenging the practice of tax avoidance, while also saying these people just need to be paid more.

Baume, the general secretary of the First Division Association, told BBC Radio 4's Today programme: "We now need to be very transparent, very clear that this cannot continue, but at the same time grasp the very difficult political nettle which is to address pay at the senior levels of the civil service. Frankly, it's a shambles. Ministers are going to have to raise the salaries."

He added: "Under the last Labour government there was a big push to bring people into the senior levels of government, from in particular the private sector … in certain cases because the market rate was so much greater than the salary that would have been offered in the civil service, various deals were being done and some of these are now being exposed."

So, what he’s saying is that, really, we only have ourselves to blame. If we had only paid the poor little blighters the going rate in the first place, they wouldn’t have had to worry about avoiding tax. Yeah, right.



  • Mike H.
    Everyone tries to avoid tax as much as possible. If there are loop-holes, they will be open to exploitation.
  • Natty
    Doesnt dear old Dave Hartnett have any thing to say about this? No wait that was tax evasion this is only tax avoidence the first as Dave said means more goverment spending cutbacks, avoiding tax causes no pain at all. And I am sick of the constant excuse of "blame the last goverment" whats the fucking point of having an opposition.
  • daniel
    scum bags
  • Al
    The problem is that what Ed Lester was doing is, for most of us, probably classed as tax evasion not avoidance. The government bought in IR35 to stop contractors doing exactly this. I have no problem with tax avoidance but, if a loophole is shut, then it doesn't seem particularly fair that HMRC will come after some of us but not their friends in the civil service.
  • Dick
    If these are companies rather than individuals, then surely the company names and the addresses of their company premises should be made public.
  • Phil
    Is there not a case that we should be encouraging this kind of thing in the public domain. Presumably this allows you to hire better talent for less money. This surely serves the public interest? What would be the point of stopping this practice? Either you'd end up with these guys receiving the same wage but taking home far less and eventually leaving to work somewhere else. Or you pay them a far higher salary and end up with the govenment giving these guys cash to then take it back straight away. Seems pointless to change it.
  • Sicknote
    It's only tax avoidance when you get convicted; you need to get caught first.
  • Richard
    @sicknote, you don't get convicted for tax avoidance since it's not illegal :-P
  • Nick T.
    Yeah because if you pay them more, then they'll stop avoiding tax instantly and start paying their full whack, and not just trouser even more. Everybody knows THAT.
  • Alex B.
    Well said, Phil. I doubt you'll get many other people realising the sense of what you've said, though...
  • Idi A.
    @Phil @ Alex B Yes, because you can see by the state of the country that we are hiring the most talented, brilliant civil servants can't you? Why, they *must* receive more money to carry on with their excellence! The rest of us are just not worthy.
  • Dick H.
    Let's all go to Greece instead!
  • Boris
    I only enjoy a small salary and pay tax on that just like any proper politician but this may be the way to go for all civil servants and council employees. I see a future where all bin men have private companies that receive payment for thir consultancy and also buy council houses for them to live in. No point paying taxes when you are funded by taxes eh? In fact why not just stop taxing council workers at all and do away with all the pointless paperwork. Yes, that's my new policy. Reduce wages and no tax. Vote Boris.
  • dickydolittle
    These Civil Service clowns really are amateurs if the best they can manage to steal from Old Blighty PLC is £273k. They need to take a lesson from the 16,000 top Whitehall and gonzo's who voted themselves "unfunded" pension increases in 2006. How does £75 million EACH sound? Bang Tidy. Must dash - JK asbo feast is on in a minute!
  • Alex B.
    @Idi Amin "Yes, because you can see by the state of the country that we are hiring the most talented, brilliant civil servants can’t you?" Phil didn't say it'd allow us to hire "the most talented, brilliant civil servants", just "better" than if the civil service weren't able to pay market rates. If the state of the country is bad now...
  • Kevin
    @Phil you are totally right. People seem to forget the boom years. Didn't see the unions voting no to above inflation pay rises, or better standards of living. Didn't see people voting in parties who weren't ofering tax cuts back then either. If we'd paid more tax when we had the money maybe we wouldn't be in so much trouble now. Funny how you only have a go at people when things are bad but don't see how you were contributing in the boom years. Anyway, all these people would have been paying tax, just the tax they have to pay as businesses or self-employed people which is obviously what their contracts were for if they were getting paid that way. @Dicky nothing like a nice ranting blog is there. True facts covered in 'bloody EU' bull.

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