Top civil servants paying themselves through personal service companies

Approximately 2,000 public sector officials are under investigation over their payroll arrangements. The civil servants were found to be paying themselves through the use of their own personal service companies as a tax efficient method to reduce their tax bill. The service contracts of the officials will be examined to identify whether they are self employed or not. If they are found to be employees, they will be required to pay the required tax and national insurance and will face fines. It is unclear as to whether the officials have employed effective tax avoidance measures. A number of the individuals have actually declared the use of their personal service companies and were given clearance by the HMRC before they were set up.