Not all freelancers set out to avoid tax

The Group stressed that it was in favour of scrutinising the remuneration of public servants, and agreed that the taxman should investigate disguised employment.

However, Chris Bryce from the PCG warned against the populist attacks that are appearing in the media. He asked the media to avoid launching witch-hunts against micro-businesses in the UK as this would harm both public and private sector growth.

There have been two high-profile cases in the press recently concerning public servants and tax avoidance. The first surrounded Ed Lester, the Student Loans boss who set up a limited company to reduce his income tax bill by £40,000. This story was followed shortly thereafter by the news that 25 senior members of the Department of Health received their remuneration through their own limited companies.

The D-o-H story was made worse because at the end of last year the Department denied that this practice existed at all. It then transpired that £4 million had in fact been paid to contractor's private firms.

The CIoT's chairman, John Whiting, recently told Channel 4 news that limited companies were still a sensible way of operating. However, there is a caveat and that is to determine whether IR35 legislation applies.

In response to the latest revelations, HMRC had increased its deployment of IR35 officers.

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