Top civil servants to have tax deducted at source

CHIEF SECRETARY to the Treasury Danny Alexander has said that the head of the Student Loans Company would now have his tax deducted "at source."

The government is investigating how the head of the Student Loans Company (SLC) arranged for Ed Lester's salary to be paid through a private service company, thereby avoiding deductions for income tax and national insurance, the BBC reports.

Lester may potentially have saved tens of thousands of pounds in tax as a result of the arrangement, which was agreed with tax chiefs, Exaro News reported on Wednesday.

The SLC said it had followed all government guidelines on the appointment and remuneration of Lester.

Alexande (pictured) said earlier on Thursday that he has asked the Treasury to review the appropriateness of allowing public-sector appointees to be paid through private service companies.

"There is no place for tax avoidance in government," he told the Commons.
Alexander said he has asked the Treasury Officer of Accounts to write to all accounting officers in Whitehall to remind them that all appointments should, in line with existing guidelines, consider the costs of lost revenue to the Exchequer when considering value for money.

If any government appointments by the current or previous governments are found not to provide value for money, they should be unwound as quickly as possible, Alexander said.

Alastair Kendrick, tax director at MHA MacIntyre Hudson, said that HM Revenue and Customs would challenge directors in businesses who are paid through private services companies. Allowing public-sector directors to be paid through private companies is a "double standard," he said.

If other office holders in the public sector are paid through private service companies their salaries may not appear on a government list of public servants who earn more than 150,000 a year, Kendrick added.

The list is part of an effort to make government more open and to discourage excessive pay in the public sector.