800 BBC presenters could face tax investigations, says watchdog

Rajeev Syal
The BBC’s relationship with freelancers remains unresolved, the NAO report says. Photograph: Frank Augstein/AP

About 800 BBC TV and radio presenters could face tax investigations over their employment status after a failure by the broadcaster to clear up its payments system, Whitehall’s spending watchdog has said.

The National Audit Office said HM Revenue and Customs had opened approximately 100 investigations into BBC-related personal service companies (PSCs) after concerns were raised that they may have broken tax rules.

It said the BBC estimated 800 presenters, nearly 300 of whom were hired through PCS entities, were at risk of being challenged by HMRC.

Presenters have accused the corporation of forcing them to set up special tax vehicles to allow it to avoid paying millions in national insurance contributions.

The Radio 4 Money Box host Paul Lewis, the Front Row presenter Kirsty Lang and the DJ Liz Kershaw were among those who told parliament in March that they had been forced to set up such firms, depriving them of employment rights such as holiday and sick pay and pension contributions.

The NAO said many BBC employees were now being pursued by HMRC for unpaid tax bills, some running into thousands of pounds.

“By May 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,” its report says.

Meg Hillier, the chair of the public accounts committee, said more needed to be done to ensure certainty for freelancers working for the BBC. “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,” she said.

“The BBC and HMRC must work together to ensure certainty for freelancers, particularly for those freelancers who have been left in desperate circumstances.”

In April 2017 the government introduced changes forcing public bodies to become responsible for determining the employment status for tax purposes of all those it hired through PSCs. Assessing such a status is complicated as there is no precise statutory test of what constitutes an employment relationship, auditors say.

“Between April and September 2017 the BBC paid £8.3m of tax (in advance) to HMRC” to avoid any penalty charges for not paying tax, the NAO report says. The BBC has not yet recouped the money from freelancers, partly “because of concerns raised by individuals”, it adds.

It says the BBC has taken steps to help affected individuals but its relationship with freelancers remains unresolved and may have financial implications for the corporation.

An HMRC spokesman said: “Presenters are now increasingly paying the right tax and most do. Where presenters have not paid the right amount of tax it is right that we enforce the law so people are treated equally and fairly.”

The BBC said it had approached HMRC to discuss the possibility of an alternative approach to resolving historical cases.

A BBC spokesman said: “As the NAO recognises, personal service companies are a legitimate way of contracting for services used by many across the media industry. However, determining whether an individual is employed for tax purposes is complex and in managing this we have always sought to balance the interests of our workforce and the licence fee payer.

“We recognise there are still issues to address and remain committed to resolving them. We are currently in discussions with our presenters and are actively engaged with HMRC to explore the options for resolution.”

Lang welcomed the report’s recognition that presenters had been put into difficult positions by the BBC and HMRC and called for the two bodies to strike a deal over outstanding inquiries.

“The BBC’s clumsy implementation of these changes has had a negative effect on the relationship between management and many of the nation’s best-loved presenters,” she said. “If HMRC can strike a deal with organisations such as Vodafone and Goldman Sachs over tax, why not do so with the BBC?”