Ed Lester, the chief executive of the Student Loans Company, whose controversial tax arrangements led to an investigation into the payment methods of top civil servants, will leave his post when his two-year contract comes to an end in January 2013. Until his government-approved arrangement was uncovered by BBC’s Newsnight and Exaro News, Mr Lester received his pay package through his private company without deductions for tax or National Insurance. Although he was officially a contractor, he was, to all intents and purposes, an employee – thus throwing up issues surrounding the IR35 rules.
A subsequent investigation found that nearly 2,500 public sector staff are being employed indirectly, rather than having tax deducted at source through PAYE. Danny Alexander, the chief secretary to the Treasury, said the Treasury would insist on the most senior government employees being paid as staff, and the department would ensure that contractors who were paid through companies paid the appropriate tax and national insurance.
If your business has contractual dealings with self-employed workers, ensure that your agreements are IR35 compliant. You can download this set of template IR35 Self-employed Agreements to help establish the self-employed status of a worker.