IR35 irony as HMRC's ex-IT boss becomes short term contractor

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IR35 irony as HMRC's ex-IT boss becomes short term contractor

Posted Jul 27, 2010

The Sunday Times has revealed that HMRC's IT chief left his permanent role in June 2009, only to return as a contractor via his own limited company for the following three months.

Deepak Singh's three year permanent contract as HMRC's CIO expired in June last year - a role for which he was paid around £160,000 per year.

However, HMRC accounts filed last week - and spotted by the Sunday Times - show that Singh was retained as a limited company contractor following the end of his permanent role for three months. It is understood that Singh was paid a staggering £149,500 for this three month tenure.

It is more tax efficient to take income in the form of limited company dividends rather than PAYE - and no national insurance contributions apply to dividends.

Clearly, Singh's departure from a permanent role, and immediate re-hiring as a contractor, is precisely the practice that IR35 was initially intended to clamp down on in the first place.

It remains to be seen how the former CIO will account for his three month stint as a contractor - as dividends, or in the form of a deemed salary if IR35 applies!

According to the paper, HMRC has said it will ensure that no tax would be avoided as a result of the arrangement.

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