Crackdown on off-payroll salaries
The Government has launched a crackdown on off-payroll salaries after identifying more than 2,400 cases of public sector staff being employed indirectly.
Chief Secretary to the Treasury Danny Alexander said 40% of cases went back two years or more and some as far as 10 years. In 70% of cases, people had been earning more than £400 per day.
Since January, 350 contracts using off-payroll measures have been ended - with 10% of the people staying with departments under new terms and conditions.
Under the new rules, the most senior staff must be on payroll unless there are exceptional temporary circumstances, departments must seek formal assurance from contractors they are paying full income tax and national insurance, and if assurances cannot be given, contracts will be terminated.
He said the Government would consult on a new law to require people controlling an organisation to be on its payroll.
Mr Alexander said: "We all have to pay our fair share to help pay off the deficit. It's clear that off-payroll engagement without sufficient transparency has been endemic in the public sector for too many years.
"It is a problem that built up and was presided over by the previous government. Indeed, it is likely under their watch many more thousands of cases of off-payroll payment may have come and gone, yet no one said a word.
"The solution to this problem is not to turn a blind eye or brush it under the carpet. We have to bring an end to the don't ask, don't tell approach to this issue. It is clear the tax arrangements for off-payroll employees in the public sector are not as transparent to the employer as they should be."
Mr Alexander said his review had looked at all Government departments, their arms length bodies, and the boards of NHS trusts. Devolved administrations, local authorities and the BBC were not included in the review.
The Chief Secretary said his review had not sought to identify tax avoidance but only off-payroll contracts - he said these were "opaque" and tax avoidance could have taken place.