The BBC has admitted to telling thousands of BBC workers to go ‘off the books’, thus avoiding tax, in order to reduce the corporation’s national insurance bill.
Following revelations by investigative journalism website, Exaro News, that 3,000 BBC employees work ‘off payroll’, avoiding tax through the use of personal service companies. A Whistle blower has come forward to put on record that famous faces at the BBC are ordered by the corporation to set up personal service companies and work ‘off the books’, otherwise their jobs at the BBC would face the boot.
By channeling pay through private companies BBC stars’ tax bills can be cut by thousands of pounds per year, by reducing their tax andHMRC Tax Avoidance | BBC admits telling employees to avoid tax national insurance liabilities; the tax avoidance arrangement has been tarnished by MPs, including Margaret Hodge, as ‘unacceptable’.
Personal service companies have been banned from use in the public sector, except for in exceptional circumstances, so it is expected that Treasury Minister, David Guake, will now be under pressure to also ban the use of personal service companies by the British public broadcaster.
The Mail Online reported on the 22 July that BBC stars using personal service companies pay the “lower corporation tax rate of 21 percent instead of 40 percent income tax, paid by high earners,” and that “avoiding national insurance saves the BBC millions of pounds”. Only last week the Mail Online uncovered that 148 BBC presenters work ‘off the books’, as well as a further 3,000 BBC workers.
Former Radio Leeds presenter, Paul Carrington, admitted that he had been given no other option by BBC when he joined the corporation in 2007. Working in the commercial sector for thirty years he said that he had ‘not faced a similar demand’ elsewhere.
Paul Carrington was told to set up personal service company by the BBC
“Presenters hired by the BBC are not given any choice but to form their own personal service limited company. I was told that this is the only way the BBC hires on-air personnel. To be honest, the rigmarole of setting it up was a pain,” Carrington said.
In their defence, the BBC made the following statement:
“The BBC always advises individuals to take their own independent tax advice.” Adding that, “HM Revenue and Customs are fully aware of the BBC’s contracting processes.”
James Delingpole, politics correspondent for the Telegraph, writes in his article, ‘BBC endorses tax avoidance. Good. Now can we stop paying our licence fees?’
“Look, if the BBC were Fox News few of us would have a problem whatsoever with its stars using whichever legal tax avoidance system they wished. That’s because Fox, in its fair and balanced way, is a tireless and outspoken advocate of free markets, smaller government and lower taxation.
“But that is not the BBC’s position. Not one bit. The BBC has nothing whatsoever to do with the free market. Nor – I’d wager – do most of the 148 BBC stars channelling their earnings through private companies to avoid tax….Why isn’t the government doing more to solve this problem?
“Of all the organisations that have contributed to Britain’s economic and political decline, there is probably none that has done quite so much insidious and long-term damage as the BBC. If – as its stars’ tax arrangements suggest – the BBC is now tentatively embracing the free market then I applaud its good sense. Perhaps we can now do out bit to helping it in this direction by scrapping the licence fee.”
Following criticism, HMRC are currently planning to increase the law surrounding the use of personal service companies; More than a decade ago HMRC launched tax investigations into over 1,000 personal service company enquiries, compared to a mere 23 personal service company tax investigations launched in 2011.