BBC finance chief defends staff tax arrangements

Claims that the BBC has sought to reduce its tax contributions by requiring some employees to set up personal service companies (PCSs) are "misleading", the broadcaster’s CFO has said.

In an email to staff at the taxpayer-funded broadcaster, Zarin Patel refuted suggestions that thousands of workers had been told "to go 'off the books’ in order to cut our tax bill".

She also denied that the BBC was "avoiding national insurance contributions". She said that the BBC would review its tax arrangements in an effort to “reassure licence fee payers that all of our arrangements are functioning correctly and appropriately".

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Comments

Good grief

mackthefork | | Permalink

What is the world coming to, how the hell can any actor/presenter (except the lowest orders) possibly be employees, they move from project to project have no security of continuity (can be axed at a moments notice depending on which way the wind blows).

I hate all this rubbish, populist bullshit.  A big F to all readers of the Daily Mail and other rags I read on the toilet one page at a time.

MtF

memyself-eye's picture

I've never seen Fiona    3 thanks

memyself-eye | | Permalink

anywhere else BUT the Beeb...perhaps she moonlights on 'DAVE'?

or the 'babestation'?

Not just PSC's or BBC - all broadcasters    1 thanks

Marion Hayes | | Permalink

Many of the "employees" - you would think - should be looked at.

I was told by one radio DJ that they were all self employed yet I had been listening to him for years and all of his off-air activities I knew of were publicised as on behalf of the station.

 

Where do you draw the line?    1 thanks

ThornyIssues | | Permalink

Marion Hayes wrote:

Many of the "employees" - you would think - should be looked at.

I was told by one radio DJ that they were all self employed yet I had been listening to him for years and all of his off-air activities I knew of were publicised as on behalf of the station.

 

Assuming that your DJ and others like him do actually perform other work out side of their "main" contract, where do you draw the line? 20%, 30% or even 50%? I know plenty of SE tradesmen who have supplied a large proportion their services to larger construction conglomerates for decades. Should they also be forced into "disguised employment"?  If you sign a mutually agreed contract of employment, you are an employee. End of. Anything else is a business and should not be anything else but a business. End of.

 

Status

mikefleming3028 | | Permalink

The rules are the rules unless we can have a debate over the moral issues of trading via a PSC.

Double standards? the BBC should damn well know better.

Could the Company be Paradox Productions Two ltd, co no 06793536? worth a look  as its sitting with £587K on its balance sheet at 31st March 2011. One shareholder and one director.

If you are a newsreader/ journalist the BBC is obviously the best gig in town!!

It should/could have been so simple....

justsotax | | Permalink

if employer/contractor was responsible for making decision as to employee status all done (what was originally set down).  At least then HMRC would simply ask BBC/BT etc who are these subcontractors....prove they are employees - and if you can't here is the bill.  (no need to visit all of the monkeys...just the organ grinder....so to speak)

 

But as @mike says.....rules is rules....check status....and you either fall within IR35 or not.....

 

How about John Simpson?

trevv69 | | Permalink

Not got the book on me at the moment, and going on holiday today, but I recall a short passage in the first of John Simpson's autobiographical books (Strange Places, Questionable People, iirc) about him going self-employed - while all the time continuing to do his main work entirely for the BBC and holding a series of job titles such as "World Affairs Editor". He certainly could be said to have posed as a BBC employee when he rashly claimed that it was the BBC (his team) that had "liberated" Kabul from the Taliban in 2001 - some time after his status changed.

Can't recall that he mentioned any encouragement to change from the hierarchy at the Beeb, but I'm sure it's plain from the text that his motivation was financial.

And I know of at least one other case that has been publically noted over the years - Garry Richardson(sp?) Who does sports reporting on the Today programme on Radio 4 and TV. I recall that from a media press article some time ago, before all this blew up as an issue.

Now, we may not know the IR35 history of these arrangements, but we don't have to speculate that they exist and for whom - in these cases it's public record.

Ugh!    1 thanks

mackthefork | | Permalink

I predict none of them fall within IR35, but the government are happy to target innocent companies organising their affairs in an efficient way by slinging dirt about the place, I look forward to each member of the cabinet issuing copies of their own tax returns so we can see they only contain employment income and nothing else (no trusts, no dividends, no capital allowance claims, no offsetting of capital losses against gains, or using the annual exempt amount, hell one paper even mentioned utilising your personal allowance in the same sentence tax avoidance LOL) then I will happily join in, however this will never happen as they are the biggest crooks and evaders/avoiders out there.

Regards

MtF

PS BEEB will cave like JC because Joe Public is clueless and brainless (we all want to pay more than we should right?) and also has a long memory as long as he's told what to think by The Daily Mail every morning.

I hope I won't get arrested for having an opinion here.

BBC "off payroll employees"    2 thanks

kelvin | | Permalink

One wonders at the sheer bravado of the BBC in insisting that all is well with these "service company" arrangements.

Take, for example, Jeremy Paxman.

Does a "master/servant" relationship exist between the BBC and Paxman - of course it does.

He is required to be at the BBC studio when he is told, he reads a script made up by the BBC.

Does he choose where he works - of course not. When he works - of course not.

Can he substitute "another" to take his place - of course not.

Ergo, he is an employee of the BBC.

It seems the BBC may well enjoy a similar advantageous tax status as MP's with HMRC - one that is not available to the bulk of UK taxpayers.

 

Surely the test is who else do you work for ?    1 thanks

mickeyparish | | Permalink

When drawing up a contract for an ex employee who now provides us with testing services, our solicitor told us it was only ok for them not to

be an employee if they a) had other clients, and b) could choose their own hours to complete their work in.

Clearly F Bruce et al don't qualify under either of these provisos, and are therefore employees in reality.

Looks like the year end

michael blair | | Permalink

Looks like the year end creditor roughly eqautes to corporation tax too, as opposed to PAYE on a deemed payment. But I'm with the folks that think the whole tax avoidance malarkey has gone a bit daft courtesy of the Mail!!

Other work

Klandrews | | Permalink

I would say most of the BBC newsreaders do other work.  In my last company we paid fees to a number of them to compere at awards ceremonies. 

I wouldn't go as far as to say other work is irrelevant but....

mackthefork | | Permalink

kelvin wrote:

One wonders at the sheer bravado of the BBC in insisting that all is well with these "service company" arrangements.

Take, for example, Jeremy Paxman.

Does a "master/servant" relationship exist between the BBC and Paxman - of course it does.

He is required to be at the BBC studio when he is told, he reads a script made up by the BBC.

Does he choose where he works - of course not. When he works - of course not.

Can he substitute "another" to take his place - of course not.

Ergo, he is an employee of the BBC.

It seems the BBC may well enjoy a similar advantageous tax status as MP's with HMRC - one that is not available to the bulk of UK taxpayers.

 

It doesn't have to be the key issue.

He doesn't read a script, he may or may not be told what questions to ask in interviews, a second question must be his own depending on what answer is given in a particular circumstance, he doesn't sound like the automatic train announcments to me.  99.9% (at least) of his seniors would be incapable of making effective replacement for him, he brings a particular skill to the company which is not available to them otherwise.  I doubt very much whether any sensible person (with the smallest knowledge of the issues) would see him as an employee of the BBC, however he is in the unfortunate position of having his earnings linked to his public perception (much the same as all the other poor souls who are going to get robbed of 15-20% of their income by the lynch mob coming over the hill with pitch-forks anytime now.

Please can all the moaners volunteer to pay more than they should, as it is only fair when you ask that of others.

Regards

MtF

@mackthefork: OK. As you invited: a "sensible person" writes...

dstickl | | Permalink

Patel's assertion of: “In my judgment, the IR35 anti-avoidance legislation is very strongly crafted, so that if you work through a service company, on an employment-type contract or quasi-employed, you will pay the same amount of tax” doesn't really deal with the legacy of the BBC chief's scandal over John Birt as reported by The Independent on Sunday [28 FEBRUARY 1993] showed, here's a link:-

http://www.independent.co.uk/news/bbc-helps-its-chief-to-avoid-tax-exclu...

... -avoid-tax-exclusive-birts-salary-paid-to-his-private-company-1475816.html 

In particular, TIoS reported in part: "Because celebrities are paid from a variety of sources - books, personal appearances, films and records - they are usually given freelance contracts, as are producers of one-off programmes. But it has now emerged that senior BBC executives, who neither appear in programmes nor produce them, enjoy similar treatment."   And that was about 20 years ago!

So, as you invited, a "sensible person" writes - regarding posts such as the Deputy Director-General of the BBC, such as John Birt [now enobled as a Labour Lord perhaps?], and of course Paxo [who is obviously identified by the public as a BBC "permanent" personality and hence "an employee of the BBC"] - that the public licence / fee payer, to use your words, "would see him as an employee of the BBC".  

Regarding Patel's assertion of: “In my judgment, the IR35 anti-avoidance legislation is very strongly crafted ... " it seems to me, that if you work through a service company, your SC's Report and Annual Accounts ought for clarity, by a new law, to include statements publicly clarifying:

(1) whether or not the SC is subject to make IR35 deemed payments, and

(2) whether or not ALL employer national insurance contributions due under IR35 have been paid to HMRC, either in part or in full.  

This change to the law (perhaps via a Statutory Instrument - S.I.) on the presentation of accounts would make public the required evidence for the perception matters that you seem to be concerned about, wouldn't it, unlike now? This new provision would have helped in the notorious alleged SLC case, where there would not have been a story, if journalists could see that ALL potential IR35 target dues were paid - or not!  And it would catch any false declarations too.  And it would help HMRC to focus their work, at reduced costs of public expenditure to other tax payers too, a classic WIN-WIN scenario to delight sensible persons!

As an aside: as IR35 hasn't been justified - at least for me - for "Victor or Victoria Meldrew-like" workers aged over SPA (State Pension Age), why not start to simplify taxation by IR35 abolishment if >SPA?  [e.g. as set out on this link:- 

http://www.accountingweb.co.uk/article/ir35-controlling-persons-rules-st... ]

IR35 is a voluntary system

mackthefork | | Permalink

Only by awful planning/or a strong desire to give money away, can a person fall foul of this horribly ineffective legislation.  I doubt journalists would want IR35 to work as most of them are probably employed through service companies, outside IR35. 

Personalities have no choice, once they are outed, even though they are doing nothing wrong they will lose 15-20% of their income, due to state and media sponsored theft, I put it strongly there, but this is what it comes down to.  A clear choice between losing a ton of money (from your big stack) and working in McDonalds if you push it.

What happened to JC was a travesty, his privacy was violated (probably by a HMRC employee), if they want to turn over his tax planning then the courts were the right place, not the papers.

Did I really say I wanted the public to decide what the law should be?  I'm not sure I do, a return of lynch mobs is guaranteed.

Regards

MtF

 

@mackthefork: YES "the public to decide what the law should be"

dstickl | | Permalink

Hi mackthe(non-pitch?)fork!    ReYrQ: IF you believe - as was the USA form of democracy that Republican party's Bush and Labour party's Blair apparently demanded as part of the notorious invasion of Iraq - in Government by the people, for the people, THEN to use your words "a voluntary system" is indeed "the public to decide what the law should be", i.e. for the modern democracy system that we live in in England, for which some people fought.

And if I recall the busy fools of the Labour party correctly [IMHO Harriet Harman probably/allegedly] sometimes this includes an appeal to an alleged court of public opinion.  What I found very funny - from a democratic perspective - is the following:

The Rt Hon Alastair Darling MP seemed to me IMHO to say some time ago in Parliament that "the lynch mob" had caused "Fred the Shred" to be stripped of his knighthood (correctly IMHO).    

IF the Rt Hon Alastair Darling MP correctly and completely describes the only modus operandi of "the lynch mob" in our third millenium, THEN - regarding your forecast that "a return of lynch mobs is guaranteed" -  surely that's a good thing, isn't it?    BUT if it's not to your taste, MtF, then is emigration your only way out?

I'm not about to threaten to leave......

mackthefork | | Permalink

IF the Rt Hon Alastair Darling MP correctly and completely describes the only modus operandi of "the lynch mob" in our third millenium, THEN - regarding your forecast that "a return of lynch mobs is guaranteed" -  surely that's a good thing, isn't it?    BUT if it's not to your taste, MtF, then is emigration your only way out? 

.......the country, because.....

a) No one would care

b) It would cause me inconvenience and I don't speak French

c) This is the best country in the world to live in IMHO, even if things get a little tricky for a while common sense will hopefully prevail.

The courts should decide how to inperpret the laws, surely this is not too much to ask, common sense is not a popular trait of the wider public.  Experts are needed in certain areas, who are free from the shackles democracy places on this 'common sense' judges and the lords are examples of this and why this is such a good place to live, if lords had to face re-election they would pander to public opinion.  Looking back this would probably mean, no votes for women, no civil ceremonies for same sex couples, prisons full of them in fact, and god knows what other kinds of state sponsored fascism.  Politicians, except the good ones, will always do what is popular and persuade you this is good.

Who is Fred the Shred?  Fred Goodwin, why should he have lost his knighthood, all he is guilty of is running a business poorly, if every knighthood was withdrawn for this, at least half in business would have them taken back.  Take a look at others stripped of knighthoods, and what they did and compare.

This country should stick to values of fairness and justice, there is no room for the mob.  Lots of people have been set up as scape goats for what went wrong to distract from the failure to make any corrective action either by Labour/or the coalition.

If there is something wrong with tax laws they should be corrected, I have no problem with this, but I object to innocent folk being censured when they have in reality and according to the law, done nothing wrong.

Regards

MtF

@mackthefork: Fred Goodwin, IMHO, set a poor role model that ...

dstickl | | Permalink

Hi mackthefork!    ReYrQ: Fred Goodwin, IMHO, set a poor role model that disgusted the majority of the "innocent folk" in Edinburgh, in Scotland and in the UK.   Clearly, the democratic will was that Fred should be stripped of his knighthood.   And indeed, Fred was then "shredded", so to speak.

And my riposte to your objection "to innocent folk [including those who are critical of JC's ALTA, perhaps?] being censured when they have in reality and according to the law, done nothing wrong" is that public commentary before charges are made and the case is in court before a jury is indeed the tradition in this country (that you are apparently unwilling to leave) of allowing foreplay of conflicting allegations / interpretations of assertions that   (1) nothing wrong has been done, against   (2) something illegal may have been done, and any evidence should be displayed.

That is true, but....    1 thanks

mackthefork | | Permalink

dstickl wrote:

Hi mackthefork!    ReYrQ: Fred Goodwin, IMHO, set a poor role model that disgusted the majority of the "innocent folk" in Edinburgh, in Scotland and in the UK.   Clearly, the democratic will was that Fred should be stripped of his knighthood.   And indeed, Fred was then "shredded", so to speak.

And my riposte to your objection "to innocent folk [including those who are critical of JC's ALTA, perhaps?] being censured when they have in reality and according to the law, done nothing wrong" is that public commentary before charges are made and the case is in court before a jury is indeed the tradition in this country (that you are apparently unwilling to leave) of allowing foreplay of conflicting allegations / interpretations of assertions that   (1) nothing wrong has been done, against   (2) something illegal may have been done, and any evidence should be displayed.

The problem isn't that ordinary people are critical of such arrangements, that is to be expected and only fair, what is wrong is that the powers that be are getting involved in picking on one individual, when thousands are doing the same perhaps even tens of thousands, including IMHO probably many coalition MPs and even cabinet members, and most of the ones who are not are working pretty hard in other areas to make sure the family silver is kept intact.  The hypocrisy of that particular situation is what stinks to high heaven, let us see every tax return for the last 10 years of every conservative MP (including the PM), have the debate on tax avoidance in the open with the facts known if it must be had, not dirty tricks and cheap point scoring.

Also my point is not that FG did not deserve to be stripped of his knighthood (although I may have said that), my main point is there are thousands of honours out the and very few are taken away, and when they are it is always for a whole lot worse that FG has done, and many who have done far worse still have them because people laugh at corruption until it hurts them personally.  Fairness is important, people should blame themselves more than FG as we all played a part in enabling the shady business practices of the major banks, and the poor risk management of same.

Respectfully

MtF