Liz Truss's top aide is having his salary paid to his lobbying company, it has emerged - just days after the government announced a huge tax shakeup benefiting people in this position.
The PM's chief of staff Mark Fullbrook is now helping to shape government strategy even though he is not being directly paid by the government.
Instead his wages are paid by Fullbrook Solutions, a lobbying firm he set up in April but which has since suspended commercial activity.
No10 today told The Mirror it is "not unusual" for employees to work for the government on secondment, and said all the necessary clearances have been obtained.
It comes after Chancellor Kwasi Kwarteng last week announced rules preventing people paying themselves via a company were scrapped.
The rules were brought in under the previous Tory government in an effort to close controversial tax loopholes - making employers responsible for ensuring workers paid the correct taxes.
A source told The Sunday Times it is "unheard of" for an official as senior as Mr Fullbrook to be employed in this manner.
But a spokesperson for Mr Fullbrook told The Mirror: "This is not an unusual arrangement. It was not put in place for tax purposes and Mr Fullbrook derives no tax benefit from it."
Labour deputy leader Angela Rayner today 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."
Mr Fullbrook has already found himself mired in controversy after it emerged he had been interviewed by the FBI over an alleged criminal plot to bribe an American politician and influence a US election.
Mr Fullbrook, who ran the Prime Minister’s leadership campaign, was questioned as a witness by agents.
His salary has not been disclosed, but his predecessors were paid around £140,000.
Downing Street said that when an employee is on secondment their salary - including costs such as National Insurance - are paid to their company, which then pays the individual.
This process, a spokesperson said, has been cleared by ethics advisors at the Cabinet Office.
A No10 spokesperson 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
“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.”
As The Mirror reported last week, complex IR35 tax rules will be axed from next April - meaning self-employed workers will once again be responsible for determining their own employment status.
It affects workers who have set themselves up as private companies, including delivery drivers, building contractors and many others who typically work for other businesses and are not on their payrolls.
Under the current system, the business that you work for is responsible for deciding your tax status - this means workers can often end up paying unnecessary costs.
The aim is to ensure all workers are paying the appropriate amount of tax and national insurance contributions.
