How many civil servants are involved in tax avoidance?

Has the government become embroiled in a major tax avoidance scandal?

It now transpires that more than 2,000 senior members of the civil service are being paid “off payroll”, meaning that together they avoid paying millions in income tax.

Following the disclosure that Ed Lester, the head of the Student Loans Company, received his salary through a private company, the government conducted an audit on the way top public servants get paid.

Danny Alexander, the chief secretary to the Treasury, said the sheer amount of these off the payroll hires suggests that a lot more artificial tax minimisation could be going on than we originally thought. He made the comment in a letter to George Osborne, a document that was subsequently subject to a leak.

The government has around 2,000 civil servants working on interim contracts. 60% of them have been in their position for longer than a year. Only 400 have been working in their department for less than 6 months.

It is thought that officials earning in excess of £58,000 are making use of tax avoidance measures to pay tax at just 21% instead of income tax at 40-50%.

Mr Alexander said senior officials and board members holding financial responsibilities should be salaried and go through the payroll. In exceptional circumstances this requirement could be waived, but not for any longer than six months.

Richard Bacon, the Tory MP for South Norfolk, recently told the BBC Newsnight programme that he thought the problem was widespread in the NHS and across local government as well.

Not surprisingly a spokesman for the Treasury said the department did not comment on leaks.

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