HMRC probes 100 BBC stars: High earners on Corporation's payroll are being investigated over alleged tax avoidance
- Top staff at BBC were routinely paid through controversial personal service companies
- They face demands to hand back tens of thousands of pounds in unpaid income tax and national insurance
- Being paid through service company can allow high earners to pay 20% corporation tax on some income instead of 45% top rate
At least 100 BBC presenters are being investigated over alleged tax avoidance.
HM Revenue & Customs was thought to be pursuing 23 staff over claims they set up elaborate schemes to minimise their liabilities.
But the taxman has now confirmed that the number of high earners in its probe has reached three figures.
Top-flight staff on the BBC's payroll were routinely paid through controversial personal service companies.
HM Revenue & Customs was thought to be pursuing 23 BBC staff over claims they set up elaborate schemes to minimise their liabilities. But the taxman has now confirmed that the number of high earners in its probe has reached three figures
They now face demands to hand back tens of thousands of pounds in unpaid income tax and national insurance.
The BBC stressed the claims were 'historic', also involving past presenters, saying the issue was industry-wide.
But a financial expert accused public sector workers of defrauding the tax authorities. Campaigners said BBC licence fee payers who pay their fair share to HMRC would be appalled.
The scandal erupted in 2012 after a report found that the BBC paid more than 124 stars via the service companies.
They included former Newsnight presenter Jeremy Paxman and Fiona Bruce. There is no suggestion that they are being investigated by HMRC or suspected of wrongdoing.
Following a public outcry the Corporation said it had moved 85 presenters on to its books as full-time employees.
But the rapidly expanding scope of the HMRC's investigation emerged yesterday in a tribunal judgment against BBC newsreaders Tim Willcox and Joanna Gosling.
Top-flight staff on the BBC's payroll were routinely paid through controversial personal service companies. The scandal erupted in 2012 after a report found the BBC paid more than 124 stars via the service companies. They included ex-Newsnight presenter Jeremy Paxman and Fiona Bruce. There is no suggestion they are being probed by HMRC or suspected of wrongdoing
Mr Willcox and Miss Gosling are accused of failing to pay enough tax during years when they claimed they were not employed by the corporation. They are appealing against the judgment.
The BBC, which was blocked from giving evidence in the case, said: 'HMRC have indicated to the BBC that there are around 100 additional cases under consideration involving current or former BBC presenters.'
It said it believed HMRC was investigating 'presenters who are engaged by other broadcasting organisations'.
Margaret Hodge, Labour chairman of the all-party parliamentary group on responsible taxation, said the developments were disturbing.
'We've known since 2012 that staff at the BBC have been abusing a system which was set up to allow people like plumbers and child minders to set up a business,' she said.
HOW THE BBC HELPED STARS TO REDUCE TAX
The BBC began moving 85 of its stars on to staff contracts in 2013 following a public outcry over the use of ‘personal services companies’ to reduce their tax liabilities.
It followed a review by accountancy firm Deloitte the previous year which identified that 96 on-air ‘talent’ workers were paid more than £50,000 a year through service companies in 2011-12.
The report described them as a ‘high priority’ for becoming members of staff.
The household names in the category reportedly included newsreaders Fiona Bruce, Emily Maitlis, Gavin Esler, Joanna Gosling and Tim Willcox.
Personal services companies were introduced at the turn of the century by Gordon Brown when he was Chancellor to help self-employed workers, including plumbers and labourers, who struggled to get work unless they formed a limited company.
A review by accountancy firm Deloitte identified 96 on-air ‘talent’ workers were paid more than £50,000 a year through service companies in 2011-12. The report described them as a ‘high priority’ for becoming members of staff. The household names in the category reportedly included newsreaders Fiona Bruce, Emily Maitlis, Gavin Esler, Joanna Gosling (left) and Tim Willcox (right)
But they have been exploited by thousands of people. Being paid through a service company can allow high earners to pay 20 per cent corporation tax on some income instead of the 45 per cent top rate. This is because they can take their salary in the form of dividend payments. They also avoid paying 12 per cent National Insurance.
But the employer also benefits as they do not have to pay a 13 per cent National Insurance contribution.
There is no suggestion any of the BBC presenters have behaved improperly.
Staff including former Newsnight presenter Jeremy Paxman, said they were advised by the BBC to set up these personal services companies. But full-time workers who use such companies purely to cut their tax are known as ‘disguised employees’. This is banned under HMRC rules.
Allegations of widespread abuse of the loophole at the BBC prompted George Osborne to launch a crackdown last year.
'Personal service companies were not set up to allow well paid presenters to avoid tax. It's an absolutely deliberate ploy. The BBC promised they put an end to this. I hope they have. In the meantime licence fee payers won't look kindly on the news that so many people earned money from our taxes and refusing to pay their fair share.'
Peter Hargreaves, of FTSE 100 pension firm Hargreaves Lansdown, said: 'These are public sector workers defrauding the tax authorities. We are paying these people's wages. This shows the public sector is just as corrupt as the private sector.'
Freelance and casual workers have been allowed to pay themselves through personal services companies – so they are taxed as a company rather than as an individual.
Perfectly legal, the system was established for freelancers such as plumbers, childminders and workmen not on a company's payroll.
But MPs and campaigners say the loophole has been widely exploited by highly-paid professionals across the country, including at the BBC, who are not technically contractors at all and are doing the job of a normal employee.
The BBC stars are accused of being in breach of a tax avoidance rule, called IR35, that says people cannot be 'disguised employees' by paying themselves through companies. Successive governments have been accused of turning a blind eye to this.
The revelation in 2012 that the practice was widespread at the BBC triggered a major backlash. George Osborne launched a crackdown, saying it was costing the Treasury £400million a year. Since then HMRC has stepped up its investigation.
John O'Connell of the TaxPayers' Alliance said: 'Licence fee payers have a right to know where their money is going.
'The BBC has a duty as a public service broadcaster not to try to circumvent the rules by hiding the amount its talent are earning.'
A BBC spokesman said: 'As the judgment says this is an industry-wide issue and affects those who have been engaged in this way for a number of different organisations.
'The exact number of cases that will be taken forward will be determined by HMRC.
'This particular tribunal relates to tax issues between 2006 and early 2013 and not the present day. It is up to individuals to ensure they pay the right tax, and since 2013. The BBC has adopted a new employment status test that provides a clear and consistent approach to the employment status of journalists and presenters.'
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