A number of presenters for the BBC may face huge bills for backdated tax, after the use of personal service firms.
The BBC allegedly advised some freelancers who earned over £10,000 per annum to invoice using a third party, which is one way to reduce National Insurance liabilities. In 2012, the BBC received criticism from the committee for public accounts, as it had permitted about 1,500 TV presenters to receive pay through a personal service company. Stars like Jeremy Paxman and Fiona Bruce are thought to have been among those involved.
According to the PAC, the BBC could be accused of being complicit with the avoidance of tax as they were classed as companies instead of employees. Since then, the BBC has moved more of the on-air talent to its ‘staff’. The corporation has put into practice a test that can determine whether someone is an employee or self employed, which includes determining the amount of editorial control a person has over the activities they undertake.
A number of presenters have been consulting their accountants to find out whether or not they will have to pay tax duties, which will be backdated. If it turns out that the broadcaster should have treated them as staff at the time, they will have backdated duties to pay. The CFO of the BBC at that time, Zarin Patel, had raised the matter previously when a report produced by Deloitte concluded that some of the working conditions of the presenters could have meant that they should have been on the payroll.
A spokesperson for HMRC commented:
“When the employment relationship does not accurately reflect the underlying reality of the relationship, the wrong tax is paid. HMRC has powers to correct the tax treatment when the employment relationship is not what is claimed.”
A spokesperson for the BBC confirmed that the responsibility of ensuring the correct tax and National Insurance is paid lies with the individual.
What is a personal service company?
A Personal Service Company is a third party, usually a limited company, through which payments to a contractor or freelancer are made. Tax liabilities are reduced by being paid through a PSC.
What are employment status tests?
By determining the status of a worker, it is possible to determine their rights and liabilities, particularly tax. Various questions and scenarios are considered to decide whether a person is classed as self employed or employed. If a person is incorrectly being paid through a PSC, they will be liable to pay income tax and NIC on all payments received during that time.
Please contact us here at The Accountancy Partnership if you believe that you should be treated as an employee.
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