Buried in the Budget:Freelance company tax rules ” shake up ” on way

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Almost entirely missed by the press coverage of the Budget this morning, George Osborne, the Chancellor, announced a radical review of  freelance  tax employment rules through what is known as IR 35.

Not mentioned in his speech – the changes were hidden away in the full Budget document. The full story of this change written by Alison Winward  and Frederika Whitehead is on the Exaro news website  at http://www.exaronews.com.

For those worried by the changes to the IR 35 rules   the official Treasury document uses the dreaded word simplification – the same phrase used by the Chancellor to impose a ” Granny Tax ” – a  future loss of  income for 4.5 million pensioners  by freezing tax allowances for most of  those who have  incomes above the state pension. Like pensioners this could affect millions of people.

The full section in the Treasury  reads:

 ” Personal service companies and IR35 –

 The Government will introduce a package of measures to tackle avoidance through the use of personal service companies and to make the IR35 legislation easier to understand for those who are genuinely in business.

This will include: strengthening up specialist compliance teams to tackle avoidance of employment income; simplifying the way IR35 is administered;

and subject to consultation, requiring office holders/controlling persons who are integral to the running of an organisation to have PAYE and NICs deducted at source by the organisation by which they are engaged. (Finance Bill 2013)”

Basically Hmrc are giving a warning that the  wheeze that enabled Student Loans Company chief Ed Lester to hold one official position in Whitehall, will be banned everywhere. It will also effect local government, the NHS and now the private sector, as people won’t be able to claim it as freelance earnings through a  personal services company. They will have to go through PAYE and pay national insurance.

There is at least a year’s grace before this happens – as legislation is planned for next year’s finance bill – and implementation could be delayed until 2014.

In the meantime the small print announces a crackdown from Hmrc on freelances who use this method. The revenge of Danny Alexander, chief secretary of the Treasury, who missed the whole Ed Lester arrangement when he personally approved all high paid Whitehall staff, looks like being rather more widespread than people anticipated.

Student Loans Chief Ed Lester’s personal company bites the dust

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An idyllic scene at Temple Mill Island, which used to be the home of Ed Lester's personal service company.

Student Loans Company chief executive, Ed Lester, is closing down his personal service company after the furore over the revelations of his tax arrangements.

 A notice in today’s London Gazette reveals he and his partner Dolores Hawkins have applied to Companies House to have the firm called Placepass struck off the register.

Full details of the story are on the website http://www.exaronews.com  but suffice to say the company has been around for 14 years during the time Mr Lester worked for the Office for Government Commerce, NHS Direct and Motability and has had various home addresses from Cambridge to London Docklands.

The firm was used  as a ” tax efficient” way for the chief executive  to funnel his £182,000 pay and pension package and his £28,000 in expenses from the Student Loans Company. It was based at his home on Temple Mills island on the River Thames at Marlow, Buckinghamshire. The island is a gated community.

Ed Lester’s decision is interesting . The story of his tax arrangements  is already causing alarm among thousands of other people working for government departments, agencies ,the NHS and local government. The chancellor, George Osborne, is also looking at changing the tax laws covering this in tomorrow’s budget. It will be complicated and people need to watch for the small print in the Budget statement to find out what will happen.

Reported to HMRC:The £100,000 a year Treasury minister too poor to pay an intern

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David Gauke MP, the Treasury minister who wants his intern to work for free for at least six months

Today the website graduatefog reports that David Gauke has been reported to HM Revenue and Customs for being in breach of the minimum wage legislation for offering an unpaid ” training post” in his constituency. As readers of this blog know this is not the first time he has had advertised for a six month unpaid vacancy. So perhaps HMRC should take other recent appointments into consideration.+
Since this blog appeared Mr Gauke has attacked as ” morally repugnant” people who pay cash to builders, cleaners etc. if they beleive it is part of tax avoidance. But presumably this does not arise for his interns – as they work for free anyway.

After a Budget that gave  tax cuts for the rich and pay freezes and job losses for the poor, step forward, David Gauke, Exchequer Secretary to the Treasury, forced to answer questions on the pasty tax U turn today. He is the man who will oversee the tax cuts in the new finance bill and has overall responsibility for HM Revenue.and Customs. He is also in charge of policing the minimum wage when unscrupulous employers avoid paying staff ( you couldn’t make this up)

His big contribution to help Britain  moving is to offer one new personal job at his constituency office in Rickmansworth, Herts. There is only one problem. You need to either have rich parents ( who will give you an allowance) or a lot of inherited wealth.  There is no pay and you must be Tory inclined( and obviously believe working for free is a good Tory policy)

The advert is here. http://bit.ly/AlHBho

As a minimum condition you must work for him for  nothing for six months  if not a year or more and you better have at your own expense, learnt advance computer skills ( doesn’t sound that Mr Gauke is computer savvy).
As it says: “Duties will include administration, basic correspondence, diary management, fundraising, campaigning and related tasks. The intern will also have the opportunity to work one day a week in the Westminster office.”

Now I understand as his constituent that Mr Gauke is very hard up. He only has an income of just over £100,000 a year – with his £98,750 salary and he claims from the taxpayer a London living allowance of £3379.15 a year ( desperate problem for MPs having to pay for higher London prices except for the taxpayer paid subsidised food in Parliament)

Funnily enough his expenses paid by the taypayer for the last financial year come to almost the same £98,680.93 as his salary including some £78,000 on staff ( presumably in Westminster rather than Rickmansworth), another £9000+ on accommodation and £10,000+ on administration. So the poor man only has £200,000 going through his accounts.

Then there are his two homes to maintain by Tory standards well below any mansion tax level. But  poor man,since this terrible crackdown on  Mps expenses he has had to lose  such a lot.  He did grab £15,000 a year  in mortgage interest payments ,a  quarterly £687 maintenance charge and car parking fees- all paid  from the  taxpayer on his Westminster Bridge Road apartment in London which he paid  £285,000 in 2007.  Mind you he has had a £30,000 rise in his income since the coalition came to power.

Incidently none of this latest expenses information is on his personal website – which  on this issue doesn’t appear to have been updated since 2009. No doubt this will be done free of charge by his new employee.

What one might have expected from a government with one million young people on the dole – is that Mr Gauke might have just gone down to the Watford or Hemel Hempstead dole office- and given a leg up to some Tory inclined youngster on the dole. Or he might  like many other Mps in his party just decide to pay a minimum wage to one of the newly unemployed graduates. But obviously paying £6 an hour would send him and his wife to the bankruptcy courts. For Mr Gauke, it is not Greed is Good  but Exploitation is Excellent.

Perhaps as a resident of Berkhamsted in his constituency we should launch an appeal for the cash stricken Treasury minister or send food parcels to his new recruit so he can at least survive on an egg sandwich.

Internaware  who campaign at @internaware against exploiting interns are not impressed. Gus Baker said: “Revenue and Customs have set up a hit squad to enforce the minimum wage for interns and yet the minister in charge is refusing to pay the people in his own office.

“David Gauke… is also putting an opportunity out of the reach of the vast majority of young people who can’t afford to work for free.

“At a time of high youth unemployment when young people desperately need to demonstrate experience on their CVs, this is completely irresponsible.”

Mr Gauke is very comfortable with this. He told BBC News which followed this up : “It’s advertising for a post for volunteers. Lots of people want to do it. It’s good experience.

“It involves visiting my local Conservative Association, getting some experience of Westminster.

“I think that’s perfectly reasonable and those that have had the experience of working there have enjoyed it and found it very good experience.”

Anyway for those who want to tell him what they think his e-mail at Parliament is gauked@parliament.uk  and the constituency office address for food parcels is Scotsbridge House
Scots Hill, Croxley Green,Rickmansworth Hertfordshire WD3 3BB.

Cameron’s Nightmare Legacy: Brutalised Britain

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The London Spring - creating the brutalised society that could come to fruition by all out privatisation pursued by people like Brian Coleman

London Spring (click on this link for the full theatre programme and venue)

Image a Britain where everything is privatised and the masses impoverished and brutalised. This is background to my partner in crime and fellow author Francis Beckett’s new play, The London Spring, now on at the Etcetra Theatre in the Oxford Arms,Camden.

Set in a transit lounge at Waterloo Station where wealthy Russian, American, Australian and Chinese tourists arrive in the UK it depicts the arrival of Michael, (Mike Duran) a naive but wealthy US medic, who is totally unaware of what a moral cesspit this country has become.

In a series of literally bruising encounters he learns that the privatised police force has to be regularly bribed to provide him with any protection. His suitcase will be nicked at the earliest opportunity, he will have bribe the competing down and outs just to go to the loo and if he steps out in the street to cross Hungerford Bridge he is likely to be mugged and robbed. His only safe way around London is in a tourist coach where he is carefully shepherded and protected by guides.

The picture is of country welcoming rich tourists and health tourists to see its sights, stay at its posh hotels and get state of the art medical treatment. But they are kept well clear of the locals.The Royal Free hospital in Hampstead ( which can already take 49 per cent private patients under Andrew Lansley’s reforms) is now owned by an American owned insurance company and only treats foreign patients and wealthy Brits.

 The play is also an unrequited if a little improbable love affair between the American and down on her luck British trained doctor, Catherine (Suzanne Kendall). There is a superb performance from down and out revolutionary Trot, Jack (Michael Yale) who is both menacing and  a good ranter. And Danny Kennedy, the security officer is a believable privatised Mr Plod.

 It perhaps no coincidence that Francis lives in the London Borough of  Barnet – or Broken Barnet as prolific and hard hitting blogger Mrs Angry calls it on her site – which is the Tories’ flagship authority for planning to privatise everything. In the real world it has already had a private security force, the now bankrupt MetPro, whose officials took secret photographs of its residents attending a  council meeting approving cuts and has even been accused of driving around in fake police cars. They did not accept bribes though I have known private security officers in Britain accept bribes to allow people to park in private car parks when they can’t find anywhere else to park.

Its leading figure Brian Coleman, who harangues single mums, doesn’t believe in anyone else’s human rights and is on record in saying there is nothing that can’t be privatised, might be quite at home in this new brutal Britain. 

The play ends with a demonstration growing across London as tens of thousands gather in Trafalgar Square knowing the authorities ( no doubt  with Mr Coleman as chair of the privatised emergency services for the capital) will shoot demonstrators.

 Fanciful you might think, but the play is running in a week when on  BBC Newsnight Lord Lawson is calling for the retirement age to be raised to 80 and the right-wing Institute of Economic Affairs wants the old age pension to be phased out and people forced to save from their meagre wages or starve.

 Go, see this while it is on this weekend and next week. Perhaps Francis should invite Brian Coleman to see the nightmare results if his wet Tory dream goes wrong.

Margaret versus the mandarins

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Margaret Hodge: Standing Up for MPs' and the public's rights

Watch out for a major speech by Margaret Hodge, chair of the Commons public accounts committee, at Policy Exchange in London this Thursday on the accountability of Whitehall to Parliament.

This is going to be a historic moment for the relationship between MPs and mandarins and I am not expecting the doughty chairman of Parliament’s most powerful committee to pull any punches. I also expect it to ignite a big debate.

 It is also important moment for people who believe that Parliament is just a talking shop. This is because it will show that MPs want action on the way our taxes are spent and even more so on who pays their taxes.

 It is also about the honesty and integrity of Dave Hartnett, the head of the Inland Revenue (HMRC), and his attempt to get away with telling lies to MPs on a deal with one of biggest bankers, Goldman Sachs.

The story of this dispute is published today by Exaro News at http://bit.ly/zHz7pP or on the Exaro News website http:// www.exaronews.com .

 Suffice to say it reveals a massive tussle between Lord O’Donnell, the former Cabinet Secretary and Mrs Hodge over whether civil servants are accountable to MPs or ministers – going to heart of the matter of whether MPs can stand up for us as taxpayers.

 Lord O’Donnell ,who wrote the letter days before he retired ,has accused the Public Accounts Committee of  publicly humiliating a senior law official at the revenue by making him swear on the Bible before giving evidence. He talks of widespread anger in Whitehall and in the legal profession about this.

 But he ignores the reason – that the man’s boss, Dave Hartnett, had misled Parliament over a sweetheart tax deal he negotiated with Goldman Sachs saving them possibly billions in tax. He pretended it was nothing to do with him.

 This is why people should back Margaret Hodge, her committee which includes very equally strong minded MPs like Tories Richard Bacon and Stephen Barclay in standing up for MPs and the public’s rights.

 Thursday will light the blue touch-paper at Policy Exchange. If there are any seats left go and watch and hear. It’s free.

Revealed: Lansley’s simply crazy commissioning guide for your operation

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Lansley's latest complicated NHS Commissioning diagram:Uploaded with help of Political Scrapbook

Commissioning-Intelligence-Model-v13

 Feeling ill and need to see your doctor. Well here’s a bit of draft helpful advice under the Lansley reform measures.  Click on the link above and  get a big surprise. Just a simple commissioning guide so the NHS can smoothly run to help meet David Cameron’s ” NHS is in my DNA ” pledge.
This was sent to me as part of the big response to the NHS London board  diagram of how the NHS will look which I published on Sunday night. I can verify  its contents and it comes from @nhs_supporters and  the respected and informed  Health Service Journal. It makes interesting bedtime reading.
This appears to lay out a few guidelines. By the time they have answered all these questions I suspect you might be dead. Notice that GPs will have to send in monthly accounts and that a lot of computer programmes (more waste on IT) will be employed to work out the mix of services. It sound a nightmare to me.
But I am sure you will be eternally grateful to the huge cut in bureaucracy needed to answer all these points. Have a good time at your doctor’s surgery. Or alternatively why not e-mail Mr Lansley himself on lansleya@parliament.uk and ask him to go through the process with you. He claims to have spent five years thinking all this up. Pity he didn’t bother to tell the voters at the election.

Revealed: Blueprint for Lansley’s bureaucrat free simple NHS (This document is real!)

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Can you understand this document reproduced below?

Simplified Map of how the London NHS will look after Lansley has finished with it

No, thought so.Well this is the all singing, dancing model of the remains of the National Health Service after Andrew Lansley has finished with it. It is being distributed by the NHS Commissioning Board and a copy has come my way.Have you seen such a complicated diagram with different arrangements for accountability and funding? Far from creating fewer bodies it seems to create a plethora of new bureaucratic ones who will  have more complicated relationships than a man with 20 mistresses.

Note where the public and the patient – supposedly the focus of David Cameron’s reforms. They are hidden under three levels of bureaucracy at the bottom of this diagram – obviously the least important people around.

 Note all the new bodies, Public Health England, London Health Education, the NHS Commissioning Body, London;The NHS Trust Development Authority, London; Clinical Senates, Clinical Commissioning Groups,  Patch teams ( I think they put sticking plaster on people when it all falls apart) the Care Quality Commission ( the body whose boss has just quit before being pushed and finds it difficult to monitor one home let alone all the rest) and a role for local authorities who being stripped of cash anyway by Eric Pickles, the communities secretary.

There are also Commissioning Support Services – I think this is the bit where the private sector make their millions from the taxpayers before they take over the running of the hospitals.

In my view this document gives a complete lie to the idea that some how  we are going to have a wonderful bureaucrat free NHS with thousands of new doctors and nurses and patients with a sensational choice for everybody in England to go any hospital they want, regardless of cost.

It more looks like a recipe for chaos, fragmentation, confused accountability and irresponsibility with taxpayer’s cash. This diagram illustrates why it is costing £1.3 billion to do this.

Andrew Lansley becomes excited when he see this wonderful NHS blueprint!

There still a little time left before collective madness sets it. If it wasn’t an insult to the thousands of mentally ill people suffering in this country, I would suggest that Mr Lansley ought to be sectioned under the Mental Health Act for all this mayhem he is about to cause. You can off course tell him he is mad yourself. His direct e-mail in the House of Commons is: lansleya@parliament.uk

Revealed: Whitehall angst and a KPMG U-turn on Lester’s tax affairs

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ImageNew e-mails and financial advice put up today on the Exaro news website (http://exaronews.com) reveal more of the background surrounding the extraordinary decision to grant Ed Lester, the chief executive of the Student Loans Company, an arrangement when he was not taxed or paid his national insurance at source.

It shows that senior civil servants were really uneasy about the deal. In one e-mail, Daniel Jenkins of the Department of Business, Innovation and Skills legal department wrote: “Applying the tests of employment status, I wonder whether it is possible for a CEO to be anything other than an employee/office-holder, given the degree of integration into the company which he presumably needs to carry out his duties.”

In another e-mail Michael Hipkins, then a BIS appointee to the SLC board writes:

“The risk, which nearly the whole interim industry currently runs, is that a contract for ‘supplying an individual’ is deemed to be an employment contract, rather than a commercial contract for services. So it appears there is a risk, and there is a judgement whether the risk is worth running.

“For my part, I note that when the terms of the interim CEO’s remuneration were cleared with Treasury, they raised no objection to the form of the contract, nor that there was an agency acting as intermediary.”

“It looks as if the company would be running no greater a risk than any other company employing interims on consultancy contracts; and the fact that the Treasury raised no objection to the proposed arrangement in the case of the CEO must mitigate that risk further.”

But the angst is nothing to the role of KPMG, the auditors and advisers to the SLC, who gave contrary advice in the space of a month.

 First they said – as subsequently was proved right by Chief Secretary to the Treasury,Danny Alexander’s decision to cancel the deal,- that no office holder could be a  limited company.

 Then they changed their mind saying; HMRC “may agree on a concessionary basis”, under a provision known as the extra-statutory concession, A37, to override the rule that all company office-holders must pay tax and national insurance.

It said that Lester’s pay can then be treated as “income of Penna (who acted as the recruiting agency for Ed Lester) for corporation-tax purposes and not income of EL for income-tax purposes.”

KPMG said that the SLC should make no expenses or bonus payment direct to Lester, but only through Penna to his personal company, otherwise it would invalidate any concession.

Even more interesting  given the developing furore over this issue the memo reveals that KPMG had done this before.

 It said KPMG “have been successful in the past in agreeing with HMRC that the concession can be extended to circumstances similar to the arrangements in place here. However as this is a concession (rather than a statutory provision) there is no guarantee that HMRC will agree that the concession  applies in this case given the agency and personal service company arangements in place.”

The next questions in this saga will be who else has benefitted from this arrangement and what George Osborne, the chancellor, proposes to do to close this loophole in the budget this month. The full story is revealed in four new articles on the Exaro website.

Save FOI: Putting the case to MPs

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 I am giving evidence to Mps on the House of Commons Justice Committee on Tuesday as part of their inquiry into the future of freedom of information. I shall be there alongside three  other journalists – Martin Rosenbaum from  BBC News, Doug Wills, from the Evening Standard, and David Higgerson, from Trinity Mirror Regionals. I shall be there on behalf of the National Union of Journalists, who have put a submission to the committee and as someone who regularly uses FOI for both my blog and for Eaxro News, the investigative news website.

We will be asked a wide range of questions on FOI. If any  journo or blogger has any point that they think should be raised about FOI you can put a comment upon this site. Please keep any comment short and succinct. I don’t promise to be able to raise everything but it would  be good to know of any burning issues which may have escaped me.

The hearing starts at 11.15am and will be broadcast live  on the internet and will also be saved for other broadcasts.

Exclusive: Top nuclear official loses contract as Whitehall panics over tax avoidance

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Office for Nuclear Regulation:First victim of Whitehall cull

The man in charge of  running nuclear regulation has had his contract terminated in the wake of panic across Whitehall following  the disclosure that Ed Lester, chief executive of the Student Loans Company, avoided having tax and national insurance deducted by being paid through a personal service company.

Paul Brown, interim chief operating officer of the newly formed Office for Nuclear Regulation,has been told that his contract will not be renewed next month provoking  extraordinary anger among professional organisations representing freelances.They fear the whole situation is getting out of hand and that there could be a witch hunt in Whitehall against anyone who has a personal company.

The full story is published on the investigative news website http://www.exaronews.com .But the essence of the dispute is that Whitehall panic – generated by the decision of Danny Alexander, Chief Secretary to the Treasury,checking 4000 senior civil servants pay arrangements could lead to the wrong people being asked to go.

The difference between Ed Lester’s arrangement, now moved to PAYE for his £182,000 post, and Paul Brown’s post, is that Ed Lester seemed to have only one job and was getting paid holidays and a £28,000 pension contribution,normally associated with a full-time post.

Paul Brown’s company,Operations Improvements Ltd, seems to be a tailor-made vehicle to offer his services for a string of jobs including previous posts at the Health and Safety Executive and the Forensic Science Service. His Linked-In site also shows he does mentoring and emergency work as a director.

The irony of all this is that Ed Lester who has had to accept a PAYE arrangement has kept his job while Mr Brown seems to have become the first senior man in Whitehall to lose his.

PCG, the organisation which represents some 20,000 freelance contractors and professionals, also has a WordPress blog where Chris Bryce,chairman of PCG, outlines the arguments for  not treating everyone the same.The blog is at http://www.insidepcg.wordpress.com  for those who want to read it.

Paul Brown is barred by his existing contract from speaking about this, but friends tell me he is furious about the decision.

Last night (Friday) it became clear that a second senior official, Jon Seddon, the finance director of the nuclear agency, had also had his contract terminated.