Interim Director of Children’s Services allowed to avoid thousands of pounds in tax by Rochdale Council

Gladys Rhodes White was paid through a private firm rather than being paid direct

One of Rochdale Borough Council's top executives has been allowed to avoid thousands of pounds in income tax under a deal agreed by the Council.

Gladys Rhodes White was paid through a private firm she had established rather than being paid direct – a tax avoidance mechanism which could reduce her income tax liability by thousands of pounds.

Mrs Rhodes White was appointed Interim Director of Children’s Services at Rochdale Council in October 2012 and began working full time in the role in November 2012.

On 20 November 2012 Rhodes White Consultancy Limited was incorporated at Companies House. The directors of the company were Mrs Gladys Rhodes (subsequently amended to Mrs Gladys Rhodes White) and Mr Stephen White.

Mrs Rhodes White's remuneration from the Council is understood to be over £100,000 per year. However, rather than paying Mrs Rhodes White personally as if she were an employee, for the period 1 January 2013 to 30 April 2013, Rochdale Council paid a total of over £36,000 in three transactions (on 2 April, 8 April and 15 May) to the private company she owns, Rhodes White Consultancy Limited.

This allows Mrs Rhodes White to pay corporation tax of 20 per cent, rather than up to 50 per cent income tax on her earnings. This pay arrangement has saved Mrs Rhodes White thousands of pounds. There is no suggestion of any wrongdoing.

However, Margaret Hodge MP, chairwoman of the House of Commons Public Accounts Committee said when it was revealed last year that the former head of the Student Loans Company was being paid via a similar arrangement: "This is a tax avoidance scheme which is totally wrong. Where you are a public servant it's not right you should be paid in a way that avoids tax. If someone sets up a scheme to avoid paying tax, that is income foregone to the public purse."

A spokesman for Rochdale Council said the 'arrangement' is no longer in place and "engagement reverted back through a recruitment agency", on 1 May 2013, "after officers noted that the process of engagement/payment from January to April was not appropriate".