Following the Treasury review of tax arrangements for public sector appointees published on 23rd May 2012. The review outlined key recommendations for all departments to implement within three months. The review was announced by Rt Hon Danny Alexander, Chief Secretary to the Treasury who found there to be a lack of transparency around the tax arrangements of key public sector appointees, with over 2400 off payroll engagements identified in central government and arm’s length bodies around 85% are engaged for longer than 6 months.
The review proposes a number of approaches by the Treasury to seek assurances required regarding the tax position of off-payroll contractors providing services in central government departments and their arm’s length bodies, for all new engagements and contract renewals as follows:
· board members and senior officials with significant financial responsibility should be on the organisation’s payroll, unless there are exceptional circumstances – in which case the Accounting Officer should approve the arrangements and such exceptions should exist for no longer than six months
· engagements of more than six months in duration, for more than a daily rate of £220, should include contractual provisions that allow the department to seek assurance regarding the income tax and NICS obligations of the contractor and to terminate the contract if that assurance is not provided
· these measures should be implemented within three months for new contacts and at the point of extensions for existing contracts and implementation will be monitored after one year, reporting back to the Chief Secretary to the Treasury and the Minister for the Cabinet Office
· if it emerges that any departments have not abided by these rules, sanctions will apply – with departmental resource budgets reduced by up to five times the payment in question. Departments should also seek to apply these principles to existing contracts, subject to ensuring value for money for the taxpayer and report to Parliament on the outcome as part of the 2012-13 annual report and accounts process.
Xxxxxx are currently in discussions with the Government Procurement Services to agree a way forward under the XXXXXX framework. We appreciate the urgency to let you know what is going on and as soon as we are in a position to confirm the new rulings we will be in contact with you. In the mean time please feel free to contact me with any questions.