HMG recently launched an investigation into how some senior Civil Servants were being remunerated. They had discovered cases where key members of a Departmental management team were not actually on the payroll, but were working through their own private companies and charging day rates somewhat above the pay scale for the role. Clearly – in their view at least – this is wrong and needs to be addressed. So they did something.
And that’s where it all goes a bit pear-shaped.
Firstly they have defined the cut-off point for this as being anyone in a controlling position charging more than £220 a day through a Limited Company. This seems a ludicrously low day rate for a senior contractor, even if they were all short-term ICT’s shipped in from the sub-continent, not the highly experienced professionals that they are. So, you have to ask, why such a low rate?
Well that’s easy. A Senior Civil Servant is defined as one on a certain pay scale structure that starts at £58,200. There are 260 available working days in a year: roughly 365 days less Saturdays and Sundays. Divide one by the other and you get a shade over £220. So there you go. Simples, as a certain Muscovite Meerkat might say.
Except clearly whoever came up with that formula has about as much appreciation of basic economics as the aforementioned meerkat. As far as I know, the Civil Service still pays Employers NICs, it gives its staff holidays, sick pay, pensions, training (lots of training, most of it wasted) and all the other usual benefits.
Frankly I find it astonishing that anyone allowed such a stupid and utterly naive approach to go unchallenged.
And there’s more.
This is about senior Civil Servants or, perhaps a little more accurately, people holding posts that are controlling roles in the Civil Service. Such people are to be bound to reveal the extent to which they are paying taxes on their income, so the HMRC can be satisfied that all necessary taxes – which, needless to say, HMRC thinks is the maximum possible – are being paid. Which has a degree of logic, I suppose, if you ignore the provisions of IR35 which, as far as I can remember, was meant for precisely the situation of an employee pretending to be a freelance to gain a tax advantage. Heigh ho…
Hang on, though, it’s even sillier.
I know of programmers – genuine, independent IT contractors – who are seeing clauses appear in their contract demanding access to their tax position. Say what? They aren’t senior civil servants, they aren’t in controlling positions. They certainly don’t work 260 days a year or get any paid benefits. Most of them aren’t even post holders but project-based resources. So why are they being faced with these intrusive and potentially damaging demands?
Could it be possibly that a significant number of Civil Servants have absolutely no idea what they are talking about, and are blindly applying a limited rule to anyone who looks like a willing victim? Now that is a really silly thought. Isn’t it?
C’mon mate – if these guys were half competent, or able to think unaccompanied, they wouldn’t be employed by the Civil Service in the first place.