No10 said that Mark Fullbrook was 'on secondment' from Fullbrook Strategies and had cleared the arrangement which sees his salary paid to the company set up in April.
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Downing Street has defended Liz Truss’s new chief of staff after it emerged he is being paid through his lobbying firm instead of directly as a Government employee.

No10 said that Mark Fullbrook was ‘on secondment’ from Fullbrook Strategies and it had cleared the arrangement which sees his salary paid to the company set up in April. 

Usually special advisers are paid directly as employees and their salary is liable for income tax. Mr Fullbrook’s predecessor as chief of staff under Boris Johnson was paid £140,000.

But being paid via his firm could allow him to be classed as a contractor, a move which could potentially lower his tax bill. 

He would also be a potential beneficiary of  changes to tax accounting for contract workers unveiled by Kwasi Kwarteng on Friday in his mini-Budget.

Controversial reforms to IR35 accounting rules will be scrapped as part of a package of measures to simplify the tax system. 

A spokesman for Mr Fullbrook last night denied the arrangement was being done to reduce his tax bill, telling the Sunday Times: ‘This is not an unusual arrangement. It was not put in place for tax purposes and Mr Fullbrook derives no tax benefit from it.’ 

This morning a No10 spokeswoman said: ‘All government employees are subject to the necessary checks and vetting, and all special advisers declare their interests in line with Cabinet Office guidance.

‘It is not unusual for a special adviser or civil servant to join government on secondment.

No10 said that Mark Fullbrook was 'on secondment' from Fullbrook Strategies and had cleared the arrangement which sees his salary paid to the company set up in April.

No10 said that Mark Fullbrook was ‘on secondment’ from Fullbrook Strategies and had cleared the arrangement which sees his salary paid to the company set up in April. 

Usually special advisers are paid directly as employees and their salary is liable for income tax. Mr Fullbrook's predecessor as chief of staff under Boris Johnson was paid £140,000.

Usually special advisers are paid directly as employees and their salary is liable for income tax. Mr Fullbrook’s predecessor as chief of staff under Boris Johnson was paid £140,000. 

‘Any government employee hired on secondment is subject to the usual special adviser or civil service codes.

‘The government will pay the salary of an employee on secondment, including costs such as Employers National Insurance contributions to the seconding company. This has been cleared by the Proprietary and Ethics team in Cabinet Office.’

Chancellor Kwasi Kwarteng described Mr Fullbrook as a ‘great professional’ today but said he knew nothing about his salary arrangements.

Deputy Labour leader Angela Rayner said: ‘The shocking revelation that the Prime Minister’s chief of staff is on loan from a lobbying company, not actually employed by the Government, raises serious questions about the new Prime Minister’s judgement.

‘While Liz Truss shows all the signs of allowing another wave of Tory sleaze to fester, a Labour government would create an Independent Ethics and Integrity Commission to clean up public life and restore the basic standards we expect.’

Mr Fullbrook has already created headlines since starting in No10 a fortnight ago. 

It emerged last week he has been interviewed by the FBI over an alleged conspiracy to bribe an American politician and influence an election. 

He has been spoken to as a witness in a US Department of Justice (DoJ) and FBI investigation involving a London-based businessman accused of bribing a US politician.

Federal agents contacted their counterparts in the UK’s National Crime Agency and Scotland Yard to arrange an interview with the 60-year-old advisor, who previously worked with Brexit-winning Australian election guru Sir Lynton Crosby. 

According to the Sunday Times, Fullbrook, who is married to former Tory MP Lorraine Fullbrook, has been co-operating as a witness with the FBI and has retained a top white collar US law firm. Fullbrook strongly denies any wrongdoing.  

Introduced in 1999, IR35 was designed to stop freelancers working for a company or local authority like a full-time employee without having to pay the additional taxes this entailed.

Originally, it was up to individuals to assess whether they were self-employed or an employee for tax purposes.

But changes in 2017 and last year placed the burden on the organisations hiring these contractors.

It came after a raft of BBC stars were ruled to have claimed lower tax bills by being paid as freelancers through companies they set up, while essentially being employees. 

The reforms attracted criticism, with some saying the changes risked damaging the self-employed and freelancers.

Mr Kwarteng said the reforms created ‘unnecessary complexity and cost for many businesses’ and promised to reverse the changes in April.

Karen Campbell-Williams, head of tax at accountancy firm Grant Thornton, said the move will ‘simplify things for businesses’ and ‘open up the labour market’.

Tom Evennett, head of private client at EY, predicted the measure will cost the taxpayer more than £6bn over the next five years.

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