Public accounts committee has criticised corporation for allowing high-profile stars to be paid through outside companies
A committee of MPs has criticised the BBC for allowing high-profile presenters such as Fiona Bruce and Graham Norton to be paid through outside companies, a move that could reduce tax bills.
The public accounts committee will demand on Thursday that the corporation reviews the arrangements by which 148 of its often highly-paid presenters are paid direct to a company, to ensure each pays their fair share of income tax.
In a highly critical report, the all-party body will also seek assurances from the Treasury that loopholes have not been left for further abuses from civil servants who wish to avoid paying income tax or national insurance from source – after the discovery that use of service companies was rife across Whitehall and the BBC.
Margaret Hodge, the chair of the committee, said the schemes’ widespread use across a number of publicly funded bodies was “staggering”. She added: “The public sector must maintain the highest standards of propriety in its employment practices if it is to show leadership in the fight against tax avoidance.”
Staff on company payrolls pay up to 50% tax on their salaries and must contribute national insurance. Those paid via personal service companies set up for the recipient’s benefit pay tax at 21% and are exempt from national insurance.
Hodge said: “[The BBC] must avoid the practice of using off-payroll arrangements for those who should be on the payroll – a practice which generates suspicions of complicity in tax avoidance. Those whose income is derived from monies raised through taxation have a particular obligation.”
Many BBC names are paid via companies, sometimes to reflect the fact they earn considerable sums elsewhere. Fiona Bruce uses a company called Paradox Productions, while Norton owned a half share in So Television, before its recent sale to ITV. Chris Moyles, the former Radio 1 breakfast DJ, and Top Gear stars Richard Hammond and James May had their own firms, too.
The BBC has launched a review of its practice of paying contributors in gross. The committee said it had discovered 25,000 off-payroll contracts but the BBC insisted that actual number of people employed on this basis was far fewer than 25,000 as “in many cases an individual – such as an occasional contributor to programmes – could be issued with a contract each time he or she is booked to appear”.
Neverthleless, Hodge said the MPs were seeking further guarantees from BBC managers: “We want the review to explain how the BBC will gain assurance that the staff involved are paying the correct amount of tax on their income.”
The issue arose in February after it was disclosed that the head of the Student Loans Company, Ed Lester, had negotiated a deal whereby he was paid through a company, reducing his tax liability by £40,000 a year. The deal had been signed off by David Willetts, the universities minister, and Danny Alexander, the chief secretary to the Treasury.
It emerged in May that 2,400 senior officials across government had similar arrangements, as did most of the 1,400 senior civil servants recruited since the coalition came to power.
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