Skip to main content

Tax dodging council fat cats

The BBC has revealed that several employees in local councils are using tax avoidance structures to limit their tax payments.

BBC's Radio 4 used a Freedom of Information request that showed that several bigwigs at councils such as Hammersmith and Fulham in London were being paid into private companies for their work in local government. Such a measure means that tax on National Insurance contributions can be minimised while those taking part will be paying a corporation tax rate of circa 20 per cent as opposed to the 40 or 50 per cent rate on income tax faced by higher earners.

The revelations are likely to fuel anger at the behaviour of those concerned, particularly as in the current period of austerity when cash-strapped local councils are having to scrap services in childcare, housing and education. One of the worst offenders was Hackney Council- which serves one of London's most deprived boroughs - which was revealed to have 39 members of staff paid this way. Taxguide.co.uk notes that at the time of writing such a scheme does not break the law.

In one particularly egregious case Nick Johnson, the chief executive of Hammersmith and Fulham was paid more than £900,000 into a private company to avoid paying tax. Johnson previously attracted controversy in 2010 when he left his role as the chief executive of Bexley Council on the grounds of 'ill health' yet he then moved into another well-paid role as the head of Hammersmith and Fulham homes.

While such tax avoidance schemes are not illegal, the recent revelations that tax avoidance campaigner Ken Livingstone, face of the HMRC Moira Stuart and a number of civil servants have been using the scheme is likely to fuel public anger at their behaviour.

Further information from Taxguide.co.uk is available here and here

Growth Company Investor: free trial