Welsh watchdog gets government hand with £19m back tax liability

The Welsh government has paid off a £19m shortfall in tax payments by the environment watchdog, Natural Resources Wales, built over “several years”. The liability – revealed following a tax office probe – may ultimately be greater and the regulator may be required to refund the payment according to Wales’ Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca-Davies.

The money owed by the NRW emerged from a historic compliance investigation by HM Revenue and Customs relating to payments to freelance and other “off-payroll” staff.

Irranca-Davies, in the Senedd, defended the government’s settlement of the immediate tax bill: “We have, indeed, stepped in, and I think it's a responsible way to step in, because we're avoiding interest and other costs accruing” he said.

He went on: “If NRW can first determine with HMRC what its potential liability is, then at that point I, along with the finance Cabinet Secretary here and others, will have those discussions with NRW to talk about how, actually, the taxpayer's money can head back to the place that it came from. We're not at that point yet.”

Irranca-Davies asserted that NRW was no longer using off-payroll contractors and said the watchdog was “undertaking proper scrutiny of what happened in order to learn those lessons going forward — to avoid it.” He emphasised that strengthened governance and oversight and risk analysis had been put in place, “to make sure that this doesn't happen again.”

The Welsh government, he said, was “trying to understand exactly what has got on in a body that we sponsor, but it is now for them to sort out.”

Irranca-Davies warned against “pointing the finger at individuals or NRW as an organisation” and defended the regulator: “Right at the heart of this are people who are passionate about the work they do, at all levels, within NRW.”