BBC EXECUTIVES will be asked to divulge presenters and other high-profile figures potentially participating in tax avoidance by being engaged through private companies, when they are called before MPs next week.
The Commons Public Accounts Committee will question the BBC after a Treasury review found that about 2,400 civil servants earning more than £58,200 a year were paying corporation tax instead of higher rate tax by working as off-payroll consultants, reports the Financial Times.
Being paid in this way is not illegal, but is seen as inappropriate for people holding public office, where the employer does not make national insurance payments.
Danny Alexander, chief secretary to the Treasury, has already vowed to rein in the practice after he conducted a review that found more than 2,000 public officials were being paid in this way.
Labour MP Margaret Hodge, chairwoman of the committee, is concerned that BBC staff, paid via the licence fee, should have their tax affairs scrutinised.
The BBC's CFO, Zarin Patel, and its head of employment tax, David Smith, will face questions over their staff on Monday.
A Freedom of Information request in 2011 found five BBC staff earning more than £150,000 were remunerated through personal service companies, while 36 on more than £100,000 were paid in the same way. In total, 300 BBC staff are paid using the method.
Although freelancers working for several organisations are legitimately using the mechanism, MPs are concerned higher earners are using it for tax avoidance reasons.
"If you earn your wage on the back of the taxpayer – and they do, in effect, because they get their money from the licence fee – you have a moral imperative to lead by example," said Hodge.
She added: "If the pure motive of this is for the BBC to avoid paying its contributions under NICs, then that's just not on."
The BBC said its use of service companies to pay on-air talent afforded both parties flexibility on how they worked together.
A spokesman said BBC contracts "stipulate that talent must pay the appropriate amount of the tax" and that it "provides HMRC with a detailed annual report of all payments made to such companies".
Before we all get too worked up about hunting down and publicly 'outing' anyone apparently avoiding tax, we should remember that none of the people who are 'off-payroll' enjoy any of the perks, legal protection and rights of full time employees.
And they must still pay tax and NI on any salaries they draw from their limited companies. These two facts are often missed by those reporting this kind of story.
The government’s proposal, currently in consultation phase, is to force ‘controlling persons’ onto the payroll of the organisations they are providing professional services to. If you have made the career choice to be a professional, senior level interim executive in finance or any other field, this has serious implications for you. There could also be several unintended consequences – read more about it on our blog if you’re interested and want to know what you can do.
Charles Wilson, director, BIE Group
Posted by: charles wilson, 13 Jul 2012 | 12:03
If the personnel are really employees, application of the IR35 should be applied. If they are bona-fide production companies and satisfy the criteria, no problem!
Posted by: Ian McGuinness, 13 Jul 2012 | 14:09
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