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Limited Companies in Public Sector

Recent reports have shown shocking numbers of workers in the public sector that are avoiding tax and dodging the national insurance by working via individual limited companies.

Around 2,000 employed workers are said to be deliberately evading these compulsory duties, and abusing the ‘tax efficient’ effects of personal limited companies. This potential loophole is being exploited by many workers, and may have been done for a long time. An inquiry is now in operation, and extensive research and investigation is being carried out against companies receiving payment and custom via their own companies.

The IR35 legislation again is the topic of discussion by many regarding this, as people are arguing and pointing out that IR35 was introduced explicitly as security so that companies functioning behind these ‘loopholes’ paid a fair and honest share of tax.

This disregard almost of the IR35 legislation has brought up many questions and demands of the tax paying public. There is the opinion expressed that the HMRC should fulfill its promises when it comes to ‘clamping down’ on tax evaders and those who attempt to beat the system. IR35 contract reviews and other systems of evaluation must be put under increasing scrutiny if the exploitation of the ambiguity in the system is corrected. After all, IR35 exists and laws are put in place to prevent schemes and to ensure that those abusing the system are singled out and then brought to justice.


By Troy Stevens


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