The tax avoidance scandal that shook up Whitehall is soon to spread to the NHS. As reported earlier following the exposure of Ed Lester, the former head of the Students Loan Company, for channelling his salary through a personal service company to avoid paying national insurance and tax at source. The practice was still going on in Whitehall two years after the event and 125 civil servants who quit have been reported to Revenue and Customs.
An inquiry has been ordered by Jeremy Hunt, the health secretary, after Danny Alexander, Chief Secretary to the Treasury requested it.
Some two years ago a lesser inquiry – just into board members of NHS bodies – revealed some 28 out of 84 people were on this bandwagon. Earlier examples included Robert Clarke, finance director at NHS Professionals, which supplies temporary workers to the health service, was paid at least £534,000 over three years through a personal-service company.
Another former chief executive of NHS Professionals, Neil Lloyd, was paid £631,000 off payroll over three years.
This time the Health Department sounds uncompromising. A spokesman said:
“Tax avoidance will not be tolerated, and there is no excuse for it in the NHS, or any other part of the public sector.”
The Trust Development Authority, which provides guidance on governance to NHS trusts, is working with Monitor, which regulates the running of health bodies, to carry out the investigation to ensure that the use of off-payroll contracts is in line with guidance.
targeted is anybody earning over £58,200 a year or has been in post for more than six months and being paid through a personal service company.
In my view it cannot come soon enough. Tax avoidance deprives the Treasury of cash that could be used for better public services. Tax avoidance in the cash strapped NHS is actually depriving hospitals and communities of vital cash. All these people also earn a fair whack. They are not those forced to take a one per cent pay rise and see their living standards go down. On the contrary through tax avoidance they get richer on the backs of others.