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No10 defends Chief of Staff Mark Fullbrook as it is revealed he is paid through his lobbying company

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Downing Street has defended Liz Truss’ new chief of staff after it was revealed that he is paid through his lobbying firm rather than directly as a government employee.

No10 said Mark Fullbrook was “seconded” to Fullbrook Strategies and that it had agreed to the arrangement whereby his salary will be paid to the company founded in April.

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

But if he’s paid through his company, he could qualify as a contractor, a move that could potentially lower his tax bill.

He would also be a potential beneficiary of changes to the tax administration for contract workers that Kwasi Kwarteng revealed in its mini-Budget on Friday.

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

A Fullbrook spokesman last night denied that the arrangement was made to lower his tax bill, telling the Sunday Times: ‘This is not an unusual arrangement. It was not introduced for tax purposes and Mr. Fullbrook has no tax advantage from it.”

This morning a No10 spokeswoman said: ‘All government employees are subject to appropriate audits and vetting, and all special advisers declare their interests in accordance with Cabinet Office guidelines.

“It is not uncommon for a special adviser or official to join a seconded government.

No10 said Mark Fullbrook was “seconded” to Fullbrook Strategies and had approved the scheme whereby his salary will be paid to the company founded in April.

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

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

“Every seconded government official is subject to customary special adviser or official codes.

‘The government pays the salary of a posted employee, including costs such as employer’s contributions to national insurance to the posting company. This has been approved by the Proprietary and Ethics team in the Cabinet Office.”

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

Deputy Labor leader Angela Rayner said: “The shocking revelation that the Prime Minister’s chief of staff is on loan from a lobbying firm, which is not actually employed by the government, raises serious questions about the new Prime Minister’s verdict.

“While Liz Truss is showing all signs of letting another wave of Tory sleaze rage, a Labor government would set up an independent committee on ethics and integrity to clean up public life and restore the basic standards we expect.”

Mr Fullbrook has been making headlines since he started in No10 a fortnight ago.

Last week, it emerged that he had been interviewed by the FBI about an alleged conspiracy to bribe an American politician and influence an election.

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

Federal agents reached out to their colleagues in the UK’s National Crime Agency and Scotland Yard to arrange an interview with the 60-year-old adviser, 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 served as a witness with the FBI and maintained a top US office. Fullbrook strongly denies any allegation.

IR35, introduced in 1999, is designed to prevent freelancers from working as a full-time employee for a company or local government without having to pay the extra taxes that it entails.

Originally, it was up to individuals to assess whether they were self-employed or tax employees.

But changes in 2017 and last year put pressure on the organizations hiring these contractors.

It came after a string of BBC stars were ruled to claim lower tax bills by being paid as freelancers through companies they founded, when essentially they were employees.

The reforms drew criticism, with some saying the changes could harm the self-employed and freelancers.

Mr Kwarteng said the reforms “created unnecessary complexity and costs for many companies” and promised to reverse the changes in April.

Karen Campbell-Williams, head of tax at the accounting firm Grant Thornton, said the move will “simplify things for businesses” and “open up the job market.”

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

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