The 148 BBC stars avoiding tax: MPs attack 'immoral' tactics of presenters who reduce their tax bills by being paid through private companies

• The BBC employs the TV and radio presenters through ‘personal service companies’ that allow them to minimise contributions to the Exchequer
• The deals also allow the corporation to sidestep millions of pounds in national insurance
• Six top BBC presenters earned at least £1million last year
• 16 of its 'top talent' earned at least £500,000

By Geri Peev

The BBC is helping dozens of its top stars to avoid paying full income tax.
It employs the TV and radio presenters through ‘personal service companies’ that allow them to minimise their contributions to the Exchequer.
The deals also allow the corporation to sidestep millions of pounds in national
insurance.

Worrying: The BBC is helping dozens of its top stars to avoid paying full income tax, it has emerged

In a grilling by MPs yesterday, BBC finance chief Zarin Patel admitted that 148 of the broadcaster’s 467 presenters – nearly a third – were paid ‘off the books’.
Margaret Hodge, chairman of the Commons public accounts committee, said the scale of the legal tax dodge was shocking.
‘The BBC is funded through the taxpayer and licence fee. It makes it entirely unacceptable for anybody to be on a contract that is in any way avoiding tax,’ added the Labour MP.

 

Last night Her Majesty’s Revenue and Customs announced it would step up its investigations into personal service companies.
The BBC insisted the arrangements were standard industry practice but yesterday agreed to review how it pays its big names.
The 148 stars are among 25,000 freelance contractors working for the corporation.

Concerns: Dozens of household names - thought to include Jeremy Paxman, left, and Fiona Bruce, right, are employed through one-man-band companies, which can minimise their tax bills

Mrs Hodge said it was wrong that the BBC allowed tax arrangements that did not seem ‘morally right’.
She rejected the idea that the stars were freelances, adding: ‘A lot of people I think are probably on these contracts are the face of the BBC and therefore to pretend that they are anything other than pretty permanent features on our television screens and on the radio is pretty naive.’

Controversial: In a grilling by MPs yesterday, BBC finance chief Zarin Patel, pictured, admitted that 148 of the broadcaster's 467 presenters, nearly a third, were paid 'off the books'

Dozens of household names are employed through the one-man-band companies, which both minimise their tax bills and let bosses off the hook for national insurance contributions.
Stars benefiting are thought to include Jeremy Paxman and Fiona Bruce. They have set up companies through which they channel their earnings.
Instead of paying the 50p top tax rate they can, with careful financial planning, get away with a lower corporation tax rate. Someone with a personal services company would be liable to corporation tax of 20 per cent on profits of up to £300,000 in a tax year. Above this profits are taxed at up to 24 per cent.
The BBC is accused of encouraging the arrangement because it pays less national insurance.
The practice also means that thousands of freelancers who do not have glamorous jobs or high wages are not afforded the same protection, holiday or sick pay as full employees.
Miss Patel, whose pay packet of £337,000 a year is more than double the Prime Minister’s, argued that the BBC’s use of freelancers was ‘custom’ in the industry.
Freelancers were paid a higher rate than staff, usually, to reflect that they had to pay their own tax and national insurance.
To the incredulity of the committee, Miss Patel denied that the BBC was trying to reduce its tax bill through the arrangements.
‘I emphasise that none of this is designed to avoid tax. That is not why we use an extensive number of freelance contracts at the BBC,’ she insisted.
Miss Patel did agree to a demand from MPs to review the way it employs its workers, however, and admitted that there seemed to be serious concerns.
She said 12,000 interim staff were on the low-tax contracts. Mrs Hodge revealed that one long-term presenter was threatened by the BBC with a very substantial pay cut unless he agreed to use a private service company.

Cut backs: The BBC will broadcast fewer original TV dramas and more and more repeats as it continues to be crippled by spending cuts

The unnamed whistleblower, who had been with the corporation for more than 20 years, was told to go freelance.
Mrs Hodge said he had been bullied, adding: ‘He was told he would not be employed unless he did that and when he asked for that to be put in writing that was refused to him.
‘He was told by the person whom he was negotiating with – he works full-time with the BBC, has no other employment, has been on his contract for probably getting on for 20 years – “Don’t worry, if you have a service company HMRC is much less likely to investigate you”.’

She added: ‘I have absolutely no reason whatsoever to think that he was telling me anything other than the truth.’
Miss Patel pledged to investigate, adding that the HMRC had been kept informed at every stage.
She argued that the BBC would be unable to reduce presenters’ salaries by the desired 25 per cent without the use of service companies.
She was unable to guarantee that the 148 ‘off the books’ presenters had paid the proper amount of tax, saying she could not comment on individuals’ tax affairs.
But Miss Patel pointed to a tax law aimed at freelancers, known as IR35, which is aimed at ensuring the same tax is paid by people working through personal service companies as well as by full-time employees.
In the same Commons session, HMRC chief Lin Homer admitted that tax inspectors had investigated just 23 personal service companies. She pledged to increase the number of investigations ‘ten-fold’ over the next year.

The Treasury recently revealed that some 2,400 senior Whitehall workers  earning more than £58,000 a year are not being paid under PAYE but through limited companies.
Earlier this year it was disclosed that the head of the Student Loans Company, Ed Lester, was being paid via a personal service company.

Until February, he received his pay packet without deductions for tax or national insurance. An outcry over the arrangements led to a review of public sector pay. Meanwhile, the BBC’s annual report yesterday revealed that more than half of all BBC2 shows are repeats.
The channel’s re-run rate was 55 per cent in the 12 months to April, compared with almost 50 per cent the previous year.
In the daytime, it is airing archive shows and more recent repeats, with most original shows moving over to BBC1.
BBC1 has a repeat level of 33.1 per cent, up from 32.5 per cent in the previous year, the annual report shows. At peak time, 8.4 per cent of its shows are re-runs compared with 31 per cent for BBC2.
The Corporation is airing less TV drama on its flagship channel and replacing it with more repeats from the archives.

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