BBC executives will be pressed to expose presenters and other high-profile corporation figures who are potentially avoiding tax by being paid through private companies, during a grilling by MPs scheduled for next week.
The Commons’ public accounts committee, made up of notoriously robust inquisitors, is due to question the BBC following a Treasury review which found that 2,400 civil servants earning more than £58,200 were paying corporation tax rather than higher rate tax by registering as “off payroll” consultants.
Danny Alexander, chief secretary to the Treasury, has pledged to crack down on the practice which is not illegal but is considered inappropriate behaviour for those in public office. It also means the employer does not pay National Insurance contributions, as it would under a normal contract.
Margaret Hodge, the committee’s chair and a Labour MP, is concerned that BBC staff – paid through the licence fee – should also have their tax affairs examined.
Zarin Patel, the BBC’s chief financial officer, and David Smith, the corporation’s head of employment tax, will be called in front of the committee to answer questions about their own staff on Monday.
The BBC has already confirmed in a freedom of information request that in 2011, five staff earning more than £150,000 were remunerated through personal service companies and 36 earning more than £100,000 were paid this way. Across the corporation 3,000 staff make use of this mechanism. While it may be legitimate for freelancers who also work for other bodies, MPs fear that higher earners are using it for tax avoidance purposes.
“If in the [higher earners] group there are presenters, I think probably we will legitimately want to know,” Ms Hodge said on Thursday.
“I have got a very simple principle here: if you earn your wage on the back of the taxpayer, and they do in effect because they get their money from the licence fee, you have a moral imperative to lead by example,” Ms Hodge added. “If the pure motive of this is for the BBC to avoid paying its contributions under NICs and for its employees to avoid paying tax and NICs, then it’s just not on.”
Stephen Barclay, a Conservative MP and fellow committee member, is also sceptical of those on lucrative contracts. “If someone is being paid more than £150,000 then you want to know what work they are doing and how long they are doing it for,” he said. “Are they really working for other organisations?”
The BBC said that the corporation’s use of service companies to pay on air talent meant the organisation and the individual could be “flexible” in how they worked together. “In its contracts the BBC stipulates that talent must pay the appropriate amount of tax and we provide HMRC with a detailed annual report of all payments made to such companies,” the corporation said.
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