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Contracted civil servants to be employees after 6 months

Any contractors working as civil servants, such as contractor accountants, will now be considered employees after working for contracts six months or longer.

The Department for Business, Innovation and Skills has been exchanging memos with the Treasury in order to formulate a plan of attack for stamping out the ability of local authorities to extensively use contracted civil servants as a tax avoidance schemes. The move, which should come into effect sometime this September, comes after the news that the Student Loans Company’s chief executive, Ed Lester, had been dodging around £40,000 a year in taxes by receiving his £160,000 salary from a service company.

Arount 2,000 civil servants are paid in such a manner, according to Treasury secretary Danny Alexander, who pledged last May to put an end to the tax avoidance schemes. Thanks to Mr Alexander’s efforts, any civil servant that works as a contractor for six months or longer and earns £220 a day or more will soon be subject to strict scrutiny from the taxman, and will face contract termination unless they transition to a payroll system instead.

In related news, the BBC has landed in extremely hot water after it was revealed that, of its 467 radio and television presenters, 148 of them were employed on a freelance basis. Around 25,000 contractors work for the BBC on a yearly basis, a statistic that drew ire from MPs and prompted the broadcaster’s CFO, Zarin Patel, to appear before the Public Accounts Committee last week to explain the practice.

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