Hammersmith and Fulham Council embroiled in ‘tax avoidance’ accusation


The council is strongly refuting allegations they paid individuals in senior roles as companies instead of as employees.


By Matthew Reason

Hammersmith and Fulham Council is under scrutiny for its alleged practice of paying individuals in senior roles as companies instead of as employees.

Tax avoidance or mishandling of finances at the council could cost up to an estimated £15million in unpaid taxes and fines.

The practice of paying individuals as companies can be used to avoid National Insurance tax and could be in violation of HMRC regulations if the council have not paid any required tax.

Pressure from the press and Labour councillors has asked for the council to publish its finances to clear up the issue of how much is owed.

However, at a recent council meeting the Conservatives voted against publishing, causing many to accuse them of covering up the true extent of the situation.

Cllr Stephen Cowan, leader of the Labour opposition, said: “It is astonishing that they have repeatedly refused to inform HMRC or guarantee that all the council’s books are now fully in order.”

He added: “All the evidence indicates that Hammersmith and Fulham Council are actively covering up its failure to act within UK tax law.”

Mr Cowan said the council will potentiality land the tax payer with an unacceptable £15million bill.

The Conservative Council strongly refute the allegations and maintain that they are not under investigation by the HMRC.

Conservative Cllr Harry Phibbs said: “This idea of £15million is ludicrous and a complete fantasy figure.”

He added: “As far as I know we don’t owe any money to HMRC and they aren’t going to investigate us. But if they do investigate and we do owe them money then we can definitely knock quite a few noughts off £15million.”

Mr Phibbs accused Labour of hypocrisy and claimed that the current council is more transparent than any other.

“We are far more transparent than the previous Labour council who hadn’t a clue how many consultants they had. They had no procedures and no proper checks,” said Mr Phibbs.

The figure of £15million is an estimate made by Private Eye in their continuing coverage of the story and is based on back taxes and fines the council may have to pay.

A council spokesperson said: “The figure is plucked out of thin air. Private Eye is no more than a comic really.”

He added: “We have always acted in good faith and we are leading the way in how councils employ interim and part time staff.

“We have cut red tape and increased transparency, ultimately leading to one of the lowest council tax bills in the UK. This is what our residents care about.”

There is an on-going, independent report into the council’s previous dealings with part-time and interim staff due to be completed in two months.

The council say if this report finds any tax issues then they will then make a decision to either pursue the individuals or declare to HMRC.

Following an internal expert review of their procurement process the council are certain that their procedures are stringent and up to date.

HMRC said they are unable to comment on the tax affairs of specific individuals or organisations.

They said: “All sorts of people work through service companies for all sorts of reasons. But where the arrangement is really only a way of avoiding PAYE tax and National Insurance, then the law says the service company must pay the PAYE and National Insurance to HMRC on behalf of the individual.”

HMRC are also committing more people to policing this area of regulation and are co-operating with a Government wide review of payments to service companies in the public sector.

Follow us on Twitter @SW_Londoner

Related Articles