Hazy Payments

a Hays (geddit!)

Mr Mustard is looking forward to his Xmas gift from Paul Hughes, the external auditor, as he has just submitted his fifth Notice of Objection and that is going to lead to even more audit fees as this is extra work which was not included within the scope of the fixed external audit fee. Mr Mustard is conscious that it is your money (and a tiddly bit of his own) that he is causing to be spent so if all of his objections are found to be baseless (surely not because they are all serious and significant matters) then he will rein himself in next year.

Here is the covering email:

29 July 13

Dear Mr Hughes

I fell over some information at the weekend that I had been searching for. That has enabled me to send you what was going to be my original objection and which relates to the cavalier way in which any old supplier has been paid as if they were a supplying agency with a contract with Hays to supply staff when they weren't. Thus there is no proper contractual basis on which Hays were paid for supplies by unauthorised suppliers. This will be a large sum of money that has been unlawfully paid out.

I attach my Notice of Objection and two lists of supplying agencies provided to me under Freedom of Information by Haringey Council who set up the contract with Hays to which Barnet Council were joined and by which terms they are bound. Prior to asking Haringey Council I asked Barnet Council for a list of suppliers under the Hays contract and they didn't have one. How any manager could sign off an invoice without that basic information is an example of shocking mismanagement.

Yours sincerely

Mr Mustard

and here is the text of the objection:


29 July 2013



Mr P Hughes
Grant Thornton
Melton St
London
NW1 2EP


Dear Mr Hughes

The London Borough of Barnet
Accounts for the year ended 31 March 2013
Fifth Notice of Objection

1 Failure to properly apply PAYE to an office holder

Payments for the interim provision of Mr Andrew Travers to act as S151 officer and Deputy Chief Executive were £82,000 through his service company Halliford Associates Ltd and Hays and to a lesser extent Comensura for the period from 1 April to 3 December 12.

I refer to these notes on the HM Revenue and Customs website

http://www.hmrc.gov.uk/manuals/esmmanual/esm2502.htm

It is quite clear that Mr Travers held an office, the statutory office of S151 officer and therefore his emoluments should have been subjected to PAYE and could only have been paid directly to himself. The Accounts include payments to Hays and Comensura (for onward payment to Halliford and then for distribution by Halliford as the shareholders of that company saw fit) which are therefore unlawful and should be reclaimed from Hays and Comensura and repaid to Mr Travers directly after the application of the PAYE regulations.

2 Multiple payments to Hays which are not covered by the contract

From when the practice started, in about March 2009 of employing interim managers through service companies (although "interim" could be 2 years or more) payments were made and shown, in some cases, on the over £500 spending lists. For some reason, possibly the interest shown by bloggers, from April 11 these payments were then routed through Hays as that anonymised the payments on the over £500 lists. Whatever the reason there would need to be a contractual basis for the payments. Had the individuals been paid under PAYE as Hays's own temps there would not have been a problem. As there were service companies acting as the supplier of the individual in many cases then these service companies would need to be supplying agencies of HAYS and that is what has been overlooked by the council. Quite simply Halliford Associates Ltd was not a supplying agency of Hays and as far as I can see never became one. You'll need to check the Comensura contract, which started on 1 October 12 when the Hays one ceased, to see if that has the requisite service companies as properly authorised suppliers.

I attach the lists of supplying agencies who have contracted with Hays to supply staff as at March 2008 and 29 March 2012. Given the impending contract end date with Hays of 30 September 12 there is no reason to suppose that the service companies suddenly all signed contracts with Hays to supply staff after 29 March 12.

What this means is that payments to Hays in respect of the following list of service companies in 2012/13 were unlawful as no contract existed and the same was the case in 2011/12.

The below is not an exhaustive list, and may contain some service companies which had ceased to supply, but that is a question that can only be answered by reference to records that are not available to me as a member of the public although they will be relevant to 2011/12.

Halliford Associates Ltd
Jacquie McGeachie HR Consulting Ltd
CCMPS Ltd
Renouval Ltd
Murphy's Solutions Ltd
Chas Dowden Solutions Ltd
Advance HR Consulting Ltd
Advantage Ltd
Lesley Meeks Associates Ltd
ANZ UK Teachers Ltd
Classroom Ltd
GJR Associates Ltd
Judd Farris Ltd
Keith Baxter Ltd
Prospects Staff Bureau Ltd
Huxley Associates / Sthree Staffing Uk / Sthree UK

Please request a public interest notice under s8, The Audit Commission Act 1998. A copy of this Notice of Objection has been sent to Mr C Naylor and to Cllr Monroe Palmer, Baron Palmer of Child's Hill, OBE, FCA. I look forward to hearing from you.

Yours sincerely


Mr Mustard

Now we simply have to sit back whilst the bean-counters at Barnet Council, the legal department probably, the external auditor himself, the Chief Operating Officer who is on holiday (sorry, this wasn't deliberate but you shouldn't assume Mr COO that the council won't get any serious objections - this isn't sleepy Barking & Dagenham you know)  and the Chair of the Audit Committee, Monroe Palmer, who is a senior and highly experienced chartered accountant who knows how many beans make five (tell me next time we meet Monroe, it won't be five will it?) work out a plan of action and then execute it.

Yours frugally

Mr Mustard

A question for PAYE experts and/or HM Revenue & Customs

No escape

Whilst trawling around the Internet and looking at the question of Town Hall Tax Dodgers (© Eric Pickles MP) Mr Mustard came across

The Social Security Contributions (Intermediaries) Regulations 2000

which came into force on 6 April 2000. They are quite short, only 8 pages, but are something of a specialist read and so Mr Mustard needs some help as he left the Inland Revenue in about 1980. You can find the whole text by googling if you want to read it but you might find the first part of the explanatory notes sufficient for you to see what Mr Mustard is driving at.

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations, which come into force on 6th April 2000, make provision for ensuring that social security contributions payable in relation to employed earner’s employment remain payable notwithstanding the existence of arrangements whereby the services of the worker for another person (“the client”) are performed through another person (“the intermediary”) and not pursuant to a contract of employment between the worker and the client.

 

Regulation 1 provides for citation, commencement and effect, and regulations 2 to 5 contain definitions.

Regulation 6 provides that, where the worker’s services are carried out in pursuance of arrangements involving an intermediary, the worker shall be treated, for the purposes of social security contributions in respect of a calculated amount of payments or benefits made or provided under the arrangements, as employed in employed earner’s employment by the intermediary, and the intermediary shall be treated as the secondary contributor for those purposes. The regulation also provides that an officer of the Board of Inland Revenue may make a decision on whether the regulation applies in a particular case.

Now it appears to Mr Mustard that if you have an arrangement where you have the following money chain:

Barnet Council to Hays HR

Hays HR to Employee Service Company Ltd 

Employee Service Company to Employee

that one of them must make a National Insurance deduction and Hays HR and the Employee Service Company both appear to be liable to pay the National Insurance.

Any explanation of this legislation, in simple terms, would be gratefully received.

Yours frugally

Mr Mustard