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BBC presenters in High Court tax battle

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Three BBC newsreaders are fighting attempts by HM Revenue & Customs to make pay back nearly £1m in unpaid income tax and national insurance.

The Financial Times reports the three presenters – Joanna Gosling, David Eades and Tim Willcox – claim they were forced to set up personal service companies, rather than going on the BBC payroll.

The claim was made as part of evidence submitted to a tax tribunal in the High Court yesterday.

Georgia Hicks, representing the broadcasters, told the tribunal: “These appeals are but the first in a potentially long line of appeals.

“The presenters are all well-know public figures who are conscious that their reputations are at stake.”

The total amount being claimed by HMRC is over £967,000, though this figure is being disputed.

The BBC has previously denied it asked presenters to set up personal service companies to avoid paying tax and NI.

A BBC spokesman says: “It is the responsibility of individuals to ensure they pay the right tax. In 2013, the BBC adopted a new employment status test that provides a clear and consistent approach to the employment status of journalists and presenters.

“An independent report by Deloitte published in 2012 found no evidence to suggest that the BBC advocated the use of personal service companies as a means of facilitating tax avoidance.”

HMRC says: “We don’t comment on identifiable individuals. Employment status for tax purposes is never a matter of personal choice and is always dictated by the specific facts.

“When the employment relationship does not accurately reflect the underlying reality of the relationship, the wrong tax is paid then we intervene to ensure the rules apply as Parliament intended.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Someone must have suggested benefits of setting up a service company and the BBC must agreed that a service company was acceptable for these three presenters

  2. Contractors work on this basis throughout financial services. In some circumstances it may be to keep permanent head count to a minimum and avoid potential redundancies. However, there is a lot of project work and change management that requires business analysts, project managers and subject matter experts. This is very different to the kind of jobs where they simply go to the same place with no end date in mind or project to complete. Some presenters and correspondents are freelance journalists but if they are subject to BBC control and potential conflicts of interests it may be difficult to provide services to any other press outlet or to appear on a rival channel. This is a grey area frought with difficulty and current government policies seems to be to shut down the ‘gig’ economy not just for the exploited workforce but for professional services also. Financial services would grind to halt without it.

  3. Uummmm !!! I maybe wrong

    I do believe some FCA / FSA nigh ranking directors did/do the same ?

  4. What is a Personal Services Company? it could be a brothel. Surely the Tax & NI payable is clearly laid out in black & white therefore why is it not paid?

    • As a limited company the ‘director’ takes dividends and salary with salary taken below the PAYE income tax and NI threshold and the rest taken as dividends. Changes to dividend taxation does mean this income will also be subject to income tax and corporation tax but likely to be considerably less than NI and income tax in most cases. There is no ‘mutuality of obligation’ with the ’employer’ unlike an employee and no sick pay, pension or holiday pay. IR35 requires the services are provided at arm’s length and should enable the service provider to have much greater flexibility than an employee, however, in most cases the services are subject to contractual obligations.

    • Bingo!! PSC is a made up title by HMRC. It does not exist in law. You either create a Ltd company or you’re self employed, when registering a company, there is no option to select Personal Services.
      PSC is an attempt to group single entity ltd companies under a different banner with the end game of battering them in to submission over retrospective taxation laws.

  5. A lot of stuff going on now re IR35 and public sector .Challenge is if the contractor is monitored very closely and are not free to send replacements and are restricted as to who they work for and enjoy same rights as employees Ie canteen sharing or parking. They really are employees and employer has to do all the tax deductions and pay the ER NIC.There are still ways around it all within the law

  6. Would be interesting to know what is BBC position on this arrangement and advantages they gained by not paying Employers NI contributions. These newsreaders along with 100,000 other public sector contractors are now in the sights of HMRC regarding their very poor execution of IR35

  7. >>You either create a Ltd company or you’re self employed
    Though there is usually no choice. An agency, which is how virtually all financial services companies get their contractors, will not contract with a self-employed person for fear they will be on the hook if that person fails to pay their taxes. A Limited company is the only option.
    Critics of Limited Companies for single-workers also seem to forget that corporation tax and VAT and pension contributions need to be paid before you even think of how to pay via PAYE and Dividends.
    And the reasons that PAYE is kept to a minimum (enough for an NI stamp) and money taken out via dividends is its tax-efficiency – obviously (though the new Dividend tax changes curtail that somewhat) but also you have to bear in mind that you will not always have income (BBC presenters aside). Periods between contracts for example means you have to be able to keep money in the company to cover those periods which may be long. Being ill and unable to work is also a consideration (though I guarantee that Ltd Company workers are sick a lot less frequently than PAYE employees!). IR35 screws all that up and has done for many years.
    Being a ltd company contractor for the vast majority is about the freedom it gives you. You lose the assurance of a consistent monthly salary, benefits and a regular place of work; you have to deal with company taxes, VAT returns, insurance, but on the plus side, you don’t have get involved in corporate politics, you are doing what you enjoy and what you are good at, and are in control of your working life and ultimate retirement. You are happy, the agency is happy, the work-provider is happy. The government should also have been happy – as a contractor, they took 5x-10x the highest Tax/NI amount they ever took when I was an employee. But they sought to get more from ‘disguised employees’ and instead of identifying those properly, decided to treat everyone the same and introduced IR35 which did away with reality and stuffed those caught with big tax bills and nothing to leave in their company for when on-the-bench. Big mistake and now they have compounded it further by letting agencies and the public sector decide who is in IR35 and who isn’t. They will just do what is easiest for them and say IN. However, real contractors are just going to refuse to work for them and go back to the private sector where IR35 is based on the reality of contracts – big loss for the public sector.
    (not dissimilar to trying raise the tax-take by increasing the top rate of income tax – you get diminishing returns past a certain point)

  8. Very weird that there is no mention of this from our licence fee funded (independent?) BBC… Not on a par with the saville cover-up, but come on the BBC.

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