top civil service man pays no tax, and thee could be more

[petercook7]

Mr Lester was recruited through the specialist recruitment agency Penna plc, and requested the daily fee for his work as a consultant of £900 to be paid without tax or National Insurance contributions (NIC) deducted.

Such a package was only possible with a special concession from HM Revenue and Customs, which was duly sought and agreed.

there could be more that pay no tax because the tax authorities have allowed them.
i'd like to ask the same.

we are all in it together.

http://www.bbc.co.uk/news/uk-politics-16709780

[scaryjim]

erm, the vast majority of my work as a consultant was paid without tax or NI deducted. It's called being self-employed - or in that case being a director of a limited company. The exact details of how each "employer" deals with that will vary, but for a lot of consultancy you work, you give the client an invoice for your time and expenses, and they pay your invoice. You then make your tax return at then end of the year and pay whatever tax is appropriate.

In this case it appears that he was employed as a consultant temporarily, and when he was offered the post full time a decision was made to continue on a consultancy basis because the direct cost to the treasury was less. And just because that money wasn't taxed at source doesn't mean it doesn't get taxed: he will pay tax on his income drawn from his private company, and the company will pay corporation tax based on its profits.

Not sure what the problem is here ... it's exactly what I would've done in his situation, and it saved SLC almost £88,000 over 2 years...

[petercook7]

erm, the vast majority of my work as a consultant was paid without tax or NI deducted. It's called being self-employed - or in that case being a director of a limited company. The exact details of how each "employer" deals with that will vary, but for a lot of consultancy you work, you give the client an invoice for your time and expenses, and they pay your invoice. You then make your tax return at then end of the year and pay whatever tax is appropriate.

In this case it appears that he was employed as a consultant temporarily, and when he was offered the post full time a decision was made to continue on a consultancy basis because the direct cost to the treasury was less. And just because that money wasn't taxed at source doesn't mean it doesn't get taxed: he will pay tax on his income drawn from his private company, and the company will pay corporation tax based on its profits.

Not sure what the problem is here ... it's exactly what I would've done in his situation, and it saved SLC almost £88,000 over 2 years...

Have you read the full story.

[scaryjim]

yes, I've read the full story, and I've understood it too, because I used to run a private limited company. He was paid as a contractor through his private limited company, which means tax and NI are not deducted at source because you're not paying an individual. The private company then "pays" the person who did the work, deducting tax and NI based on the amount the private company pays them. At the end of the trading year, the private company makes a return declaring all of its profit for the year, which is then subject to corporation tax.

The usual upshot is that it's cheaper for the contractee, because they don't have HR overheads and employer's NI to pay, and better for the contractor because the total of corporation tax and personal tax paid is less than the personal tax liability would have been for the same work. It's a relatively well known element of tax planning, and if the government genuinely wants (as they claim) to stimulate the economy by encouraging small businesses then this is exactly the way to do - by making it beneficial for people to work for themselves.

[peterb]

Another Shock Horror story by the BBC to woo the gullible.

Scaryjim has pretty much summed it up. The contract for the service was awarded to the company, and the person involved is an employee of the company. Any salary the company pays him will be subject to NI and tax under PAYE just like any other employee, and any profit the company makes will be liable to corporation tax.

Government departments usually insist on contractors setting up limited companies as it makes the administration easier, and prevents them from being potential claims for pension rights under deemed employment rules.

[Pilgrim_uk]

It's more about his contract when he became Boss of SLC. According to the article he actually saves the tax payer £80k but its the fact he doesn't not have a standard public employee contract that is being investigated.

Worked for the SLC dealing with the death certificates to get checked so you were not trying to get out on paying your debt. Very grim reading. (Which was an irony as I had a loan being paid off by the student loan company)