MPs to examine BBC freelancers’ personal service companies

The BBC’s relationships with freelancers and personal service companies (PSCs) are set to come under scrutiny once again by the public accounts committee (PAC), in the wake of a recent tribunal decision which denied one presenter IR35 status

Earlier this year Christa Ackroyd, who had been a presenter on the BBC’s Look North programme for more than a decade, lost a First Tier Tribunal (FTT) over her status as self employed. She supplied her services through her PSC, Christa Ackroyd Media Ltd, and worked under two successive fixed-term contracts between the company and the BBC.

HMRC claimed that Christa Ackroyd Media Ltd should have accounted for PAYE and national insurance contributions (NICs) under IR35 over the tax years 2006/07 and 2012/13. The total amount due to HMRC was in excess of £400,000.

The decision sparked considerable debate about the BBC’s responsibilities to other presenters using similar arrangements, several of whom told a select committee hearing that they were required to operate through a PSC if they wanted to work for the broadcaster.

Last week the National Audit Office (NAO) published findings from a review which found that in 2017-18 the BBC had contracts with 5,145 PSCs, on which it spent a total of £84m.

By May 2018, the BBC estimated that some 800 presenters, nearly 300 of whom were hired through PSCs, warranted further review as they were at risk of being challenged by HMRC. This could involve tax arrears for the BBC and for the PSCs.

According to HMRC, as reported to NAO, as at October 2018, there were about 100 open investigations into BBC-related PSCs. All of these concerned arrears of tax before the April 2017 changes. All open cases relate to tax years prior to 2017 and the vast majority of these were opened prior to the reforms of IR35 rules.

The NAO said the BBC faced unknown future financial issues relating to the unresolved tax status of presenters.

In response, Meg Hillier, PAC chair, said: ‘The public accounts committee raised concerns about the BBC’s use of PSCs six years ago. It is worrying that, six years on, the mess of clarifying the employment status for tax purposes of people the BBC hires through PSCs has not been fully untangled.

‘With around 100 investigations into PSCs still outstanding, the BBC and HMRC must work together to ensure certainty for freelancers working for the BBC. Particularly for those freelancers who have been left in desperate circumstances.’

As well as examining the impact of PSC use at the BBC, PAC inquiries over the coming months will also consider Capita’s contracts with the MoD, the defence equipment plan 2018-28, driving value in public spending, clinical commissioning groups, the Bank of England’s central services, and the Windrush generation and the Home Office. 

Report by Pat Sweet

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