By Richard Johnstone | 11 July 2014
Around one-fifth of NHS foundation trust hospitals have still to fully comply with Treasury rules restricting the use of off-payroll contractors, Monitor figures have revealed.
Following a government-wide review of the tax arrangements of senior public sector staff, the Treasury introduced restrictions on the use of off-payroll deals – where individuals are paid through personal companies – in May 2012. These arrangements mean income is not taxed at source and offer a potential means to avoid tax.
But under the government’s rules, any contractor working with government for more than six months must provide satisfactory assurances on their tax affairs. In addition, senior appointments at board level or with significant financial responsibility must be on the central payroll within six months.
Monitor was commissioned to review how well foundation trusts are complying with them, and it announced today that 21 of the 51 trusts initially in breech of these regulations had resolved all issues.
From the remaining 30 foundation trusts, 20 have one or more senior employees paid through an off-payroll arrangement and are waiting to receive assurances about their tax.
In addition, 23 (including some of the 20) still have at least one board member or senior member of staff with significant financial responsibility employed through an off-payroll arrangement.
In its review, Monitor found that 9 of the 23 face wider issues relating to their performance which is affecting their ability to recruit and retain permanent skilled staff and resulted in the need to use interim off-payroll contracts. The other 14 have plans in place to end off-payroll arrangements by the end of the year, the regulator added.
Jason Dorsett, Monitor’s financial reporting and risk director, said it was important that both patients and taxpayers were confident that foundation trusts follow best practice in managing their finances.
‘Our findings today highlight the important steps that foundation trusts are taking to follow Treasury advice about the use of off-payroll arrangements,’ he said.
‘The Treasury has made it clear that it expects all trusts to follow its advice on off-payroll arrangements. We welcome the fact that all trusts are taking action to end their off-payroll arrangements over the coming months. We will be looking at their accounts to make sure people paid with public money follow the rules set out by the Treasury, and if we don’t see enough progress we will consider whether further action is necessary.’
