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Senior executives at the National Health Service (NHS) have been told to pay interim managers through “appropriate” channels in order to tackle possible tax avoidance. This is according to a confidential letter leaked to the Health Service Journal (HSJ) which showed that NHS bosses have been ordered to stop paying temporary senior workers off-payroll.
The letter was written by NHS chief executive Sir David Nicholson and revealed that off-payroll payments could still be used in exceptional circumstances but only for a maximum of six months.
In case a temporary worker earns more than £220 a day and is off the NHS payroll for over six months, they need to assure that income tax and National Insurance is paid, the letter stated. If this is not complied with, trusts need to “terminate the contract if the assurance is not provided.”
“The requirement is aimed at preventing avoidance of payment of income tax and National Insurance contributions. 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,” the letter said.
A spokesman for the Department of Health meanwhile commented that “the public sector needs to demonstrate the highest standards of integrity. The Government is committed to tackling all forms of tax avoidance and has taken a wide range of measures to close down tax loopholes. It is essential that public sector employers, including those in the NHS, are able to assure themselves that their senior staff are meeting their tax obligations.
“When questions were raised about the tax arrangements of senior public sector appointees, the Treasury announced a review. It published the review in May, requiring Government departments and other public sector bodies, including the NHS, to implement the recommendations of the review by 23 August.
“The letter from Sir David Nicholson sets out the arrangements for implementation in the NHS. The recommendations set out in the review and arrangements set out in the letter are a reasonable and proportionate means of achieving this aim. The Treasury review found that over 2,000 key public sector appointees have been engaged off pay roll, but found no evidence of systematic tax avoidance in the NHS.”