HM Revenue & Customs has now been instructed to examine the tax affairs of the more than 2,000 individuals whom the government has recently 'discovered' to be receiving their 'pay' without the normal payroll taxes having been applied.

It seems the government has no shame: apparently having previously requested that HMRC approve an unknown number of these deals (such as would appear to be the case in respect of the former Chief Executive of the Student Loans Company) it has now demanded that the 'offenders' be reviewed and where possible, tax be recovered. Whilst government officials have previously claimed to be entirely ignorant of the tax implications of the contracts they authorised, no doubt HMRC's officers will appreciate the irony - also that NHS and local government appointees appear (for now at least) to be excluded from the review. (See Government is being Hypocritical when Dealing with Individuals through Limited Companies).

The irony will not be lost on the 2,000+ individuals involved, either. It has been reported that those whose arrangements have previously been approved by HMRC are effectively outside the scope of this review. The remainder will presumably want to know why, if their arrangements duplicate those of 'cleared' individuals, they should potentially be required to pay a lot more tax. Doubtless HMRC recognises this to be something of a poisoned chalice: if those questions are raised in public, attention may switch from government to HMRC, who may then be required to explain why some deals were sanctioned in the first place. Point 4 of HMRC's Charter requires HMRC to treat taxpayers even-handedly, which may yet prove difficult for HMRC. Problematic also for the departments who have in the past been keen to come to such tax-efficient arrangements with their external consultants, with a view to keeping their own budgets in check: it's hard to imagine they also didn't know the tax implications of the agreements they made and it's quite possible that more embarrassing correspondence will find its way into the public domain.

Article Added Sunday, 17 June 2012 | 834 Hits

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