HMRC report reveals BBC has paid almost £700m into PSCs set up by presenters and other workers in recent years.
This figure, collated from investigations into the BBC’s engagement of contractors, suggests that the use of Private Service Companies (PSCs) is more prevalent than anticipated. Hiring through PSCs alleviates the BBC of paying employers national insurance, with the arrangement also holding undeniable tax advantages for those hired – household names included. Key points from the report include:
- 6,763 BBC contractors paid through PSCs a year at peak, 2,944 of whom held on-air roles
- £688 million paid to BBC contractors via PSCs between 2011 and 2018
- 60,000 contractors hired by the BBC a year on average
100s of Presenters Face IR35 Targeting
Ongoing investigations carried out by the National Audit Office (NAO) report that HMRC has 100 open cases at present concerning PSCs that have been engaged via the BBC. Hundreds of presenters are facing historical claims, with HMRC arguing that the parties involved were paid as contractors – and thus received allegedly unfair tax advantages - when they were effectively disguised employees. These accusations present a very real possibility of financial ruin for those targeted.
Christa Ackroyd is a current example of this targeting: a tribunal found that the presenter ‘effectively had a full-time job’ at the BBC after being paid through a PSC for 12 years. She was hit with an employment tax bill of £419,000, though moved to appeal the decision in September this year. Eamonn Holmes, although not employed by the BBC, is another ongoing high-profile IR35 case.
BBC Defends Use of PSCs
Despite the NAO having found 92% of on-air contractors were ‘employed for tax purposes' after a recent review (meaning that they should never have been contracted through PSCs), the BBC still insists that most of these hires were legitimate. An estimated 800 presenters and countless more contracted camera crews, actors and entertainers could be challenged by HMRC in coming years; in light of this, the BBC has offered bail-outs in the form of loans and bookkeeping contributions to those struggling to meet tax liabilities.
It’s emerged that the BBC is in talks to propose a pay-off to HMRC in return for them dropping all back tax claims against its presenters, following on from their pay policies being dubbed ‘invidious, deplorable and disgraceful’ by MPs on the culture select committee. The BBC remains defensive of its use of PSCs as a ‘legitimate way of contracting for services used by many across the media industry’ and calls the process to determine whether an individual is employed for tax purposes ‘complex’. In the same statement, they reiterated that they ‘recognise there are still issues to address and remain committed to resolving them'.