BBC seeks to resolve row with its own presenters over tax bills
Stars claim they were pressured into setting up personal service companies in a way which later fell foul of the taxman.
The BBC has launched a new independent process to try to resolve a row with high-profile stars who claim they were pressured into employment arrangements which left them with huge tax demands.
The move could lead to the corporation making a contribution towards historic bills which in some cases run into five or even six figures.
It comes a day ahead of a hearing in the House of Commons at which MPs are expected to hear complaints that on-air presenters were encouraged by the BBC to be paid through personal service companies (PSCs), rather than as members of staff.
The arrangement later fell foul of a crackdown by HM Revenue & Customs on the alleged use of “disguised employment” to minimise tax and National Insurance.
Former BBC Look North presenter Christa Ackroyd last month lost a legal battle against a £420,000 HMRC demand for unpaid tax.
A tax tribunal said it did not criticise Ms Ackroyd, saying she was “encouraged by the BBC to contract through a personal service company”.
Further cases are expected in the courts later this year, and a number of presenters are calling on the BBC to pay the parts of their historic bills relating to employer’s National Insurance contributions.
The BBC has now announced it will set up a “fair and independent” process under the supervision of the Centre for Effective Dispute Resolution (CEDR) to determine the right approach to the cases.
Presenters who believe they have lost out through no fault of their own will be able to ask for a review of the circumstances surrounding their use of a PSC to receive payments from the BBC.
The process will determine whether it is “appropriate or reasonable” for the BBC to make contributions towards demands for employer’s National Insurance payments.
The corporation said in a statement: “The BBC is aware that there is a very high hurdle where public money is concerned and the whole purpose of the work is to inform and advise, so we cannot prejudge the outcome.
“The process will only consider whether the BBC should contribute towards demands for employer’s National Insurance Contributions, not demands for other taxes which individuals are liable for.”
The BBC has agreed to keep the National Audit Office informed of the progress of the reviews, and to facilitate any audit or assurance work required by the spending watchdog.
And it is inviting other broadcasters to consider an industry-wide approach to the issue.
Tax status in the media industry is a complex area, where there’s long been a lack of clear guidance or case law specific to the industry. HMRC guidance has changed over time and we’ve adapted our approach in line with that BBC statement
The BBC statement said: “Tax status in the media industry is a complex area, where there’s long been a lack of clear guidance or case law specific to the industry. HMRC guidance has changed over time and we’ve adapted our approach in line with that.
“We’ve always tried to balance our responsibilities to presenters with our responsibility to spend the licence fee appropriately. Our responsibility for the stewardship of public money means that we cannot assume the tax liability of others in the absence of a compelling justification for doing so.
“However, following concerns raised about the use of PSCs for BBC engagements dating from the late nineties, the BBC believes it is appropriate to look again at these issues.”
The BBC said that contracting presenters in this way had “protected the licence fee” because it placed responsibility on the PSC for paying the correct tax and National Insurance.
But it added: “We are announcing action today because we have recently been challenged as to whether there are any circumstances in which it is appropriate for financial liability arising from any misclassification of tax and National Insurance Contributions in PSCs to be the responsibility of the BBC, irrespective of the legal position.”