Public sector contractors emerge unscathed from tax scrutiny
Danny Alexander, chief secretary to the Treasury, revealed yesterday that just 94 out of 2,505 public sector contractors questioned could not provide evidence they were meeting their tax obligations.
That represents just 4% of the total, suggesting most contractors are successfully complying with strict rules affecting & lsquo;off-payroll’ public sector workers.
The evaluation also showed that 95% of government departments were “broadly compliant” in ensuring contractors provided satisfactory assurances regarding their tax affairs.
Fines are being imposed on two departments – the Ministry of Defence and Department of Health – for failure to correctly apply the UK public sector off-payroll rules.
These rules stipulate that any public sector contractor earning more than £219 per day, or on an assignment lasting more than six months, must demonstrate they are paying the correct amount of tax.
Alexander said: “I introduced tough new rules to tackle tax avoidance by off-payroll workers in the public sector in 2012, and it’s heartening that the vast majority of departments are compliant in ensuring contractors are paying the correct amount of tax.”
Juliet Byrne, legal and technical director at ClearSky Contractor Accounting, welcomed the Treasury report as evidence of contractors’ determination to “play by the rules.”
She said: “The off-payroll rules are a source of confusion and anxiety for public sector contractors, who would prefer to focus on their assignments.
“Despite this, they are taking the time to ensure they comply. Indeed, many are seeking assistance and advice from specialist contractor accountants, such as ClearSky, in order to provide the relevant assurances to their clients.
“We have witnessed a flurry of requests for IR35 contract reviews in recent days, and expect this to continue following media coverage of the Treasury’s latest findings.”