Tax questions for Michael Gove’s £1,000-a-day advisers

Academy brokers, whose role is to convince headteachers to join the academies programme, are employed ‘off book’ as ‘advisors’ by the Department of Education through personal service companies or employment agencies, despite the practice being condemned by the prime minister last year. This is from the Telegraph…

Some are employed on contracts of up to £1,080 a day – an income equivalent to almost £250,000 a year – which run for up to 10 years.

The department said the arrangement saves money and it is necessary to bring in outside experts to help failing schools, but MPs said they should be placed on the civil service payroll.

Instead, the academy brokers, who visit schools failing to meet targets to encourage them to become academies and arrange sponsorship deals, have their salaries paid as fees into personal companies.

It means the recipient can opt to pay corporation tax at a rate of 20 per cent rather than income tax at 45 per cent.

The practice has concerned ministers so much that Danny Alexander, the Chief Secretary to the Treasury, last year ordered a Whitehall-wide audit. It found up to 2,000 public servants earning over £58,200 were using the technique which gave them the opportunity to “artificially minimise” their tax bills, including 100 staff at Mr Gove’s department.

Under a crackdown in May last year, Mr Alexander said officials paid through off-books contracts for more than six months for more than £220 a day must prove they are paying their fair share of tax or lose their jobs.

It is up to departments to “assure themselves” that the appropriate level of National Insurance and income tax is being paid. It would be disproportionate to ban the practice altogether, he ruled.

Mr Cameron said it was “never acceptable” for staff to avoid tax through agencies or personal service companies.

Yet despite the public outcry, figures revealed in the House of Commons show 24 ‘academy brokers’ are still employed through service companies.

More at:  Tax questions for Michael Gove’s £1,000-a-day advisers

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