BBC to squander tens of millions in licence fee cash... paying stars’ tax
THE BBC plans to use tens of millions of pounds of licence fee payers’ cash to settle the tax bills of its stars.
Its board members have discussed using the public funds to pay around two thirds of the money the presenters owe the taxman, in a bid to draw a line under their long battle with HM Revenue & Customs.
Hundreds of BBC stars owe the taxman large sums because the broadcaster pressured them to set up personal services companies (PSCs) so they could be treated as freelances.
The arrangement enabled the BBC to save millions in National Insurance contributions, as well as the cost of sick pay, holidays, pension contributions and other staff entitlements. Presenters paid directly by the broadcaster have to pay income tax at a rate of up to 45 per cent, whereas PSCs have to pay corporation tax at 19 per cent.
But it left many of its workers facing demands for unpaid tax, after HMRC ruled that they should never have classified themselves as self-employed.
Some presenters have been left owing hundreds of thousands of pounds. The former Look North presenter Christa Ackroyd, 61, was ordered to pay £ 420,000 after losing a case against HMRC last February.
A number of those affected are highly paid household names. It is not known if HMRC is pursuing Claudia Winkleman and Chris Evans, but both broadcasters have received part of their BBC pay via PSCs.
However, thousands of others are small-time presenters who face having to sell their homes to settle their bills. The broadcaster spent years denying responsibility for the debacle, and only recently apologised to its workers for pushing them into the PSCs.
The BBC now plans to use licence fee funds to settle the matter. It will encourage workers who have strong cases against HMRC to fight them in court, with the reassurance that the BBC will pick up most of their tax bill if they fail. The broadcaster will also compensate workers who do not have a strong case against HMRC.
However, board members are eager that the affected workers try to fight HMRC where possible – and feel more confident that they could be successful following Lorraine Kelly’s legal victory against HMRC this week. The ITV host avoided a £1.2million tax bill when a court ruled that she was a freelancer. Earlier this week, BBC board members informally agreed a mechanism whereby the broadcaster would take responsibility for the money its workers would owe the taxman if they had set up a ‘basic’ PSC.
The broadcaster plans to pay the difference between the tax its presenters would have paid if they had remained on staff, and the amount they would have paid in corporation tax.
But the proposed settlement would not compensate them for any extra tax they owe because they tried to save more by hiring family members or writing off tax against expenses.
The development will be a relief to many of the workers affected by PSCs – but some insist the BBC should settle the whole bill, not just two thirds of it.
The BBC said: ‘We’re working with HMRC and our presenters to try to resolve these issues.’
‘Hundreds owe large sums’