Whitehall health staff paid via firms

By Andrew Hough

MORE THAN 25 senior Department of Health officials have been allowed to have their salaries paid to limited companies, enabling them to reduce their tax bill, it emerged last night.

The officials, who in some cases earned more than £250,000 a year, were paid salaries directly into "limited companies". A spokesman for the Department of Health said they were not "civil servants", despite many of them being employed by the department for a number of years and in "very senior positions".

A "full audit" is now being conducted by the Treasury into the arrangements. The department apologised for any "misunderstanding" after previously specifying that none of its civil servants were paid through limited companies.

The Government is conducting a Whitehall-wide review of pay to tackle tax avoidance after it emerged that Ed Lester, the chief executive of the Student Loans Company, was able to avoid tens of thousands of pounds in income tax by having £182,000 a year paid to his private company.

One Whitehall source said: "We cannot defend these arrangements, but it may be it is very common in Whitehall and this is just the tip of an iceberg."

According to leaked internal documents, the health staff earned almost £4.2 million in one year for their work with the department.

One contractor is said to have earned £273,375, while a further 19 officials were paid more than £100,000.

The majority of the "limited companies" are registered as business and management consultancies. The arrangements would enable them to save thousands of pounds a year in income tax and National Insurance contributions because they would be taxed at the corporation tax rate of 21 per cent. They would not, however, have received pension payments, holiday pay or other bene-fits.

In the majority of payments, the fees were paid to companies that had listed the same address as the home address of the staff members, none of whom have been identified.

The internal DoH payroll information, leaked to The Guardian, also details the offices in which they work, job title and email address.

Last night in a statement, a DoH spokesman apologised for the misleading information. "We can con-firm that no civil servant who is an employee of the Department of Health is paid in this way," she said. "To this extent it was certainly not our intention to mislead anyone involved.

"We would be happy to clarify the situation in greater detail with anyone who asks and apologise for any misunderstanding involved. We are currently carrying out a full audit of such arrangements in line with the Treasury review."

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