A LEADING Bournemouth council officer has slashed his personal tax bill by receiving most of his wages through a one-man company.

Executive director Mike Forrester, who was paid £139,720 in 2010/11, receives the majority of his salary through a limited company called Valfor.

It was only when he took on the role of Section 151 officer in late 2010 that he was obliged to become a council employee.

He then started to receive a portion of his salary through the council payroll and the rest through Valfor.

By being paid in this way, he received more than chief executive Pam Donnellan, who was paid £127,057.18 in 2010/11, although pension contributions increased Ms Donnellan’s salary package to £149,749.66.

This practice recently made national headlines after it was revealed that senior officials at HMRC and other government bodies were saving themselves thousands of pounds in tax by being paid in this way.

It prompted Chancellor George Osborne to pledge that he would close this loophole, which allows a worker on an annual income of £100,000 to reduce their annual tax bill from around £35,000 to £20,000.

Labour leader Cllr Ben Grower said he and some other councillors had long been concerned about Mr Forrester’s pay arrangements. “We were surprised the council entered into that agreement in the first place and I’m even more surprised they didn’t correct it when he became Section 151 officer,” he said.

“You cannot wear two hats at the same time, you are either a council employee or you are not.

“My experience as a chartered accountant is this would not have been acceptable to the Inland Revenue if they had known about it.”

Mr Forrester was appointed to the post of executive director of business transformation in late 2009 on an interim basis.

Bournemouth council chief executive Pam Donnellan said this was an efficient use of taxpayers’ money: “The use of such interim arrangements ensures that no long-term financial commitments are made during a period of reorganisation and change,” she said.

“It also avoids additional salary-related costs such as superannuation, national insurance contributions, sickness pay, holiday pay and redundancy.”

In September 2010, councillors agreed that Mr Forrester should take on the additional role of chief financial officer and Section 151 officer until a permanent appointment was made.

This recruitment process has now been completed and Mr Forrester will leave Bournemouth council at the end of March.

Robert Oxley, campaign manager of the TaxPayers’ Alliance, said: “It’s astonishing that the Bournemouth bosses have arranged this cosy deal that allows one of the council’s best paid directors to potentially avoid some taxes.

“Local residents will rightly wonder whether this arrangement is more about covertly boosting the pay of Mike Forrester rather than saving the authority money.

“A simpler, fairer tax system would weed out the loopholes that encourage this kind of behaviour.”