5 Oct 2012 10:30am

PAC criticises tax of public-sector bodies

The Public Accounts Committee (PAC) has criticised the tax arrangements of some public-sector workers - including thousands who work at the BBC

MPs have said they were shocked to find the BBC had 25,000 "off payroll" contracts. The Committee said this was too many people being left to make their own arrangements for paying tax and national insurance.

The BBC said many of these were short-term contracts and that it was reviewing these tax arrangements.

The investigation came about after a scandal earlier this year that the former head of the Student Loans Company was being paid via a company arrangement, potentially saving him thousands of pounds in tax.

PAC chairman Labour MP Margaret Hodge said, "It was shocking to find out that no fewer than 2,400 central government appointees were benefiting from off payroll arrangements.

"Furthermore, the Treasury Review only covered civil servants. Tax avoidance in the public sector goes much wider."

The Committee said that it also still lacks information about people employed by the NHS who are paid through private companies.

Hodge said avoiding tax and national insurance when paying public sector staff was "almost always staggeringly inappropriate."

"The public sector must maintain the highest standards of propriety in its employment practices if it is to show leadership in the fight against tax avoidance," she added.

"It must avoid the practice of using off-payroll arrangements for staff - which generates suspicions of complicity in tax avoidance and which fails to meet the standards expected of public officials.

"Those whose income is derived from monies raised through taxation have a particular obligation to make sure that they do not use tax avoidance schemes."

In a statement, the BBC said, "In many cases an individual - such as an occasional contributor to programmes - could be issued with a contract each time he or she is booked to appear.

"We note the conclusions of the PAC report and will respond to the points raised as part of our detailed review of tax arrangements."



Helen Roxburgh