Student Loans Company chief in tax row

[dipsydoodle]

The Treasury is to review the tax affairs of top civil servants after it emerged that the head of the Student Loans Company (SLC) is paid via a company without tax being deducted.

SLC chief executive Ed Lester has his £182,000 salary paid gross to his private service company, potentially saving him tens of thousands of pounds in tax.

The arrangement, entered into in 2010, was disclosed in a HM Revenue & Customs (HMRC) letter obtained under the Freedom of Information Act by Exaro news and BBC Newsnight.

It is embarrassing for the coalition government, which is committed to tackling tax avoidance.

http://www.guardian.co.uk/education/2012/feb/01/student-loans-company-tax-row

That stunt is alleged to have saved over £40,000 in personal tax.

[fedsron2us]

1. Simply staggering

The man was engaged as Chief Executive of the SLC so he was an officer of the company. As such his earnings would clearly fall within the scope of PAYE and NIC.

I also find the argument that allowing him to dodge tax made him 'good value' to the taxpayer laughable. As someone who works in computing I could provide similar 'value' as an IT contractor through a service company but I am not allowed to do so because of the rules set out in IR35 and Chapter 9 of ITEPA 2003

http://www.hmrc.gov.uk/ir35/

I would like to know why HMRC thinks a senior public servant like Mr Lester can be paid gross but IT contractors even on very short engagements have to be treated as employees and subjected to PAYE This is particularly relevant at a time when the Revenue are threatening ordinary taxpayers with £100 fines for failing to file their returns on time even if they are subsequently to be found to have no tax liability

To really rub salt in the wound it appears Lester is also getting expenses paid such as the cost of travelling to work in Glasgow from his home in the South of England paid on top of his fee, a perk which the rest of us could only dream about.

http://www.telegraph.co.uk/education/9054733/Chief-executive-of-Student-Loans-Company-allowed-to-avoid-40000-a-year-in-tax-by-Coalition.html

Once again it is one law for them and another for the rest of us.

[dipsydoodle]

2. The reason you may not be able to

is if you fall under master / servant relationship and the same applies even more so to him. Unless Cameron gets this revoked the entire population might as well go self employed and pay the corresponding lower NH rate.

Fuck knows what the travel allowance is - nobody can claim home to work costs.

Parliamentary Channel should be worth watching tomorrow morning.

[fedsron2us]

3. I am an ex Inland Revenue employee

so I am pretty well versed in the question of disputed employment status. I would agree that most IT contractors paid through service companies were employees in disguise (ie engaged in a contract of service under a master servant relationship) which is why IR35 was introduced. Given this legislation I fail to understand how HMRC managed to ignore all the rules to wave through gross payments to Lester as it is clear he is both as an officer of the SLC and an employees of the state. Moreover, he was getting a separate sum of £28,000 paid by the SLC into his pension pot which is not something an independent self employed contractor would assume to get paid for them as they would be expected to make provision for such payments out of their own earnings. As for his home to work travel expenses being paid that is normally only allowable if the employment is peripatetic or for a very short term placement away from the normal work base. Neither of those circumstances applied in this case.

My own view is that the British state is walking on very thin ice due to its failure to maintain a fair and equitable tax system for all its participants. They can hardly expect the general population to knuckle down to austerity and higher taxes while certain privileged members of society are allowed to continue pissing it up in the members bar.

[dipsydoodle]

4. Given this issue came about in 2010

and we're only in 2011/12 now it shouldn't be too hard to unwind this.

To have got this through HMRC chances are he knows someone there and used the old pals act.