MPs slam public sector IR35 arrangements
The Public Accounts Committee (PAC) has published a report on off-payroll payments criticising workers in the public sector for making their own arrangements to pay tax.
The committee said it was “shocked” to find the BBC had 25,000 off-payroll contracts including 13,000 for people who were on air.
However the report pointed out that IR35 was "not that easy to apply" and it was not being applied in as many situations as it could be. In 2010-11, only 23 IR35 investigations took place, down from over 1,000 in 2003-04 the PAC noted.
The PAC started its inquiries into off-payroll contracts after it emerged earlier this year that the former head of the Student Loans Company (SLC) Ed Lester was being paid via a company.
This triggered a Treasury investigation across government, which revealed that for more than 2,400 civil servants, tax was not being deducted through PAYE.
Following the review, HMRC's published a consultation document proposing to make it mandatory to put controlling persons on payroll rather than channelling payments through personal companies. The measure is slated for Finance Bill 2013, with draft clauses potentially released in early December.
AccountingWEB members pounced on distorted press coverage of the PAC report to lament they way general media tends to get tax stories wrong. Some queryied whether this is a deliberate ploy to score political points, either against the BBC in this instance, or previously when Ken Livingstone's personal service company income was highlighted during the London mayoral campaign.