The subject of Town Hall Tax
Dodging (a phrase coined by the Rt Hon Eric Pickles MP, Secretary of State for
Communities and Local Government) is one of enormous interest to the Barnet
bloggers, and we applaud the attention paid to this issue by the parliamentary
Public Accounts Committee (chaired by the Rt Hon Margaret Hodge MP) which took
place on Monday 16 July 2012.
This investigation of the issue
of tax avoidance by individuals in publicly funded posts came about following
the disclosure by Westminster journalist David Hencke that Ed Lester, the head
of the Student Loan Company, was being paid through a service company, and that
there are similar arrangements on a very significant scale throughout the civil
service and the wider public sector.
One witness before the committee
was Carolyn Downs, the Chief Executive of the Local Government Association
(LGA). She stated that the LGA had found only 13 examples of off-payroll public
sector pay.
We know that this national figure
of 13 is an understatement since the draft (i.e. unaudited) Annual Accounts of
Barnet Council for 2011-2012 show that there are 14 such arrangements recorded
as having been in place during the year for senior officers.
Far from being a practice that is
diminishing it is noted that in the previous year's accounts there were only 8
such arrangements.
The evidence to the committee was
that these arrangements were used in the short-term. We can show that this is
not true and that, on the contrary, these arrangements are used routinely for
long term appointments.
In Barnet, one ‘interim’ post
paid through a private company has lasted for more than three years. An
appointment lasting over 3 years cannot be described as short-term. In
addition, a Freedom of Information request has revealed that there have been no
efforts to replace this individual with a permanent staff member.
Evidence to the committee also
suggested that there was virtually no difference between the tax paid under
PAYE or via a service company. That is to ignore two factors. If a service
company is used certain expenses, such as travelling, can be reclaimed whereas
an employee does not get tax relief for home to work travel costs. In addition,
service companies are able to pay out their profits as dividends and National
Insurance Contributions are not paid on those. The overall contribution to the
Exchequer will be less if a service company is employed.
We look forward to the day when
Barnet Council ensures that all its officers (employees) are treated equally
and that all those people who receive their pay from the public purse recognise
what Mrs Hodge referred to as a ‘moral duty’ to make their fair contribution to
the taxes which contribute to the good of society.
We call on Nick Walkley, the
Chief Executive of Barnet Council, to negotiate the return to the payroll of
the officers concerned as this will reduce the penalties that will have to be
paid as a consequence of the inevitable HM Revenue & Customs PAYE
compliance visit.
We also look forward to following
the evolution of this story in front of the Public Accounts Committee once the
summer recess is over.
Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne
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