The council is in turmoil, doling out £440,000 payments to the ex-CEO and offering £800-a-day jobs to new directors while at the same time shedding more than 400 jobs. Following the tearful departure of one consultant who had been hired in on a six-figure package, PERRY FREEMASON, our employment law correspondent, asks whether the tax implications have been considered
There’s nothing wrong with agile, lean and other modern management techniques.
Amy Wagner left Croydon Council earlier this month, after less than a year at Fisher’s Folly as the lead on something called “Croydon 2023”.
But what’s really at issue here is how Wagner was appointed, how her fees were set and whether the Queen and her corgis got their cut.
Did she go through a competitive bid process, or was her Antipodean upbringing and education sufficient to endear her to Jo Negrini, the Aussie and council CEO, without a second thought about equality of opportunity?
A six-figure annual equivalent fee seems excessive when, for example, the Yorkshire Building Society feel able to hire a full-time professional for £65,000. That’s for an employee.
There have been other instances at Croydon Council, reported by Inside Croydon, where family friends have been installed on eye-wateringly high daily fees, despite their apparent lack of qualifications for the role.
There is no suggestion that that was the case with Wagner.
But in an organisation such as the council, which has allowed such flagrant abuses in the past, it is no wonder that staff sometimes question such appointments.
There are other, important considerations, too.
Since April 2017, Her Majesty’s Revenue and Customs have had rules that where work is undertaken for a public authority such as Croydon Council, it’s for them to decide if the contract looks like “disguised employment”. If so, the council must ensure that any payments made to the contractor are subject to deductions for income tax and National Insurance. Getting that wrong could prove embarrassing and awfully expensive if the tax inspectors come sniffing around. Did Croydon get that right?
A number of other organisations, including Barclays, have made the decision not to hire consultants unless they were paid through payroll. This is because the tax rules are complex and a pain, as you can imagine if you look at https://www.gov.uk/guidance/fee-payer-responsibilities-under-the-off-payroll-working-rules.
If HMRC came knocking on the door of Bernard Weatherill House, they’d want to see what Croydon’s policy and practice was on this issue, and what records had been kept.
Their words of warning are stark: “It should be noted that HMRC can and will seek any penalties and interest if you fail to account for any tax, failed to make appropriate tax returns or have claimed excessive tax repayments. It should be noted that when a penalty is being calculated, the extent of the information, how helpful you were with the process and the seriousness of the issues are all taken into account.”
I once worked for an organisation where HMRC did come calling. We thought we’d be OK, until a bit of digging and delving revealed that there were people working there who we didn’t know existed. They were disguised employees taken on by managers who didn’t know or care what they were doing. They were dumped fast, or converted to employees.
Mercifully the Inspector didn’t seem interested in going beneath the surface, but some organisations have paid a heavy financial price, even if they finally won.
Giving Wagner the benefit of the doubt, it appears that she was unable to get her expertise of “agile” management across to the people who most needed to heed it: the political leadership as well as the directors.
Croydon Council’s failure to get this right is inadvertently explained well by the Municipal Journal, whose Michael Burton investigated local authorities’ ability to implement flexible change programmes for their July 2019 edition:
“It is fair to say that while most councils have begun agile programmes, a majority still operate traditional management styles, structures and processes, find it difficult to keep up with technological change and feel held back by short-term budget pressures and election cycles. The very events that organisational agility can help prevent causing organisational paralysis are still the biggest barriers to adopting new behaviours.”
Which sums up our London Borough of Clusterfuck nicely. Unfortunately.
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