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12 March 2012 Last updated at 21:13 ET By Fran Abrams Reporter, BBC Radio 4's File on 4

Almost 100 permanent posts at local councils are being filled by people paid through limited companies, the BBC has learned.

Dozens of high-earners are allowed to make their own tax arrangements rather than be paid through the PAYE system.

Public accounts committee chair Margaret Hodge described the situation as a "tax avoidance scheme, which is totally wrong".

The Local Government Association said councils adhere to strict HMRC rules.

BBC Radio 4's File on 4 programme submitted a Freedom of Information request to more than 400 local authorities throughout the UK.

Several councils said they did not know whether all of their permanent employees were paid via PAYE, but some acknowledged they did employ some staff through limited companies.

Hackney Council in London had the highest number, with 39 people in permanent posts paid through external companies.

This is a tax avoidance scheme which is totally wrong. Where you are a public servant it's not right you should be paid in a way that avoids tax

Hammersmith and Fulham Council in London said 11 posts were filled by people paid through personal service companies, and a number of smaller councils had substantial numbers too.

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Council high earners 'avoid tax'