You foot the bill for Hammersmith & Fulham Council's tax blunder

HAMMERSMITH and Fulham residents have ended up footing the bill for the council's failure to pay more than £300,000 in tax to Revenue and Customs.

The authority was branded 'careless' by HMRC for the way it handled its financial affairs after £333,000 worth of PAYE and National Insurance wasn't deducted because it misreported the employment status of more than 50 people.

It hired scores of consultants, including music teachers, photographers and 'personal service companies' to carry out similar roles to full-time workers with no evidence of a formal contract, failing to deduct tax and national insurance contributions.

But this policy, exposed in the Chronicle last year, has cost the council and residents dear after Revenue and Customs made the authority pay back the full amount, as well as slapping on a £24,000 bill for penalties and interest payments.

In addition, the town hall has also had to stump up £149,000 for the independent investigation into the scandal, over a third of which was pocketed by high-cost finance firms Delloite and PwC.

Opposition Labour leader Stephen Cowan slammed the council for its profligacy and said the total was the equivalent of 163 household council tax repayments.

He said: "I first raised this issue in December 2010. Initially, the Conservative administration tried to deny it was doing anything wrong, then it tried to cover up what was happening.

"Now they admit to being 'careless' with tax payers’ money and have been fined by the tax authorities. It disappointing that this ‘jobs-for-the-boys' approach has led to so much money being wasted in fines and extra accountancy costs in these austere times. This should have been sorted out when we raised it and that money should have instead been spent on tax cuts and essential services.”

A council spokesman said: "As soon as the council became aware of tax and national insurance deductions had not been made, we made a full voluntary disclosure to HMRC and rectified this. There is absolutely nothing to suggest the council did not act in good faith and there is no reason to believe that the individuals concerned have not dealt with their tax affairs properly."