BBC helps presenters caught by IR35

02nd May 2018
Written by Nigel Nordone

BBC make 'hardship' payments to presenters left hung out to dry after being caught by IR35

It has recently emerged that the BBC have made loans/advances to those presenters who are suffering financial difficulty after being considered caught inside of the IR35 legislation and forced to be paid on a PAYE basis.  The Telegraph reported on 25th April;

“Deputy director general Anne Bulford told the Commons Public Accounts Committee (PAC) they had given loans and advances to a number of individuals with temporary financial difficulties after their tax arrangements changed.

"We think it is the right thing to do."

IR35 reform was introduced in April 2017 and means that for any contractor working for a public sector body, it is the responsibility of the public sector organisation itself to determine the tax status of its workers. Any workers found to be operating like employees would have PAYE tax and NICs deducted at source from the end client directly, or the agency they are operating through.

The BBC have been under the spotlight a lot recently and it might be that a move in this direction is to help to demonstrate to the public that the BBC do have a heart after all.

Christa Ackroyd, a former BBC Presenter of the news programme ‘Look North’, lost her appeal at a Tax Tribunal, the decision for which was released earlier this year.  Although the Tribunal found in favour of HMRC in part due to Ms Ackroyd’s lack of control of the services and there being a requirement for her personal service, the Tribunal did say in support of Ms Ackroyd that;

"She took professional advice in relation to the contractual arrangements with the BBC and she was encouraged by the BBC to contract through a personal service company."

Christa Ackroyd in being deemed caught by IR35 for the tax years, 2001-2013, was left with a tax bill of over £419,000, despite the fact that the Tribunal had acknowledged that she was in fact encouraged to operate through a personal service company by the BBC.

This was closely followed by a Select Committee Hearing held in March concerning the BBC’s treatment of its freelancers, after it emerged that some BBC presenters considered taking their own lives due to the pressure exerted by the BBC over their tax status and being coerced into setting up their own limited companies. The BBC chose not to attend the hearing and the Chair, Damian Collins MP has since written to the Director General outlining his concerns following the evidence session and requesting responses to questions, information for which must be provided before 16 May.

HMRC have a lot to answer for

Whilst the BBC may be keen to show to the public that they are trying to put things right, HMRC have kept quiet, despite the fact that the BBC has laid some of the blame firmly at their door;

“BBC Director General Lord Hall said the problems - affecting mainly radio and news presenters - were in part the consequence of a series of changes by HMRC as to the way such staff should be treated for tax purposes.

"HMRC have said the test which they were applying and asking us to apply is not fit-for-purpose, so we need to have yet another test…In some cases, it has caused some hardship. If there are cases of hardship we have made it clear we want to deal with those as a priority. My sympathies are to the people who are on the raw end of this."
The article goes on to state that; “Ms Bulford did not rule out the prospect that the BBC would end up paying the back taxes of some of the staff concerned.”

The Check of Employment Status for Tax (CEST) tool to which Lord Hall refers, was heavily criticised in the Select Committee Hearing regarding the BBC’s treatment of its workers, with those giving evidence advising that some of the questions could not apply to them, and therefore that the tool is not fit-for-purpose.

It has since emerged, via a Freedom of Information request by Contractor Calculator, that HMRC have no evidence whatsoever to demonstrate that the decision provided by the CEST tool is correct, meaning that thousands of contractors’ IR35 status may have been incorrectly determined and it will be interesting to see what HMRC will do to resolve this and to regain their trust. The only people not paying for their mistakes at the moment appears to be HMRC.

Nigel Nordone
Written by
Nigel Nordone
Nigel Nordone is the Head of Tax at Qdos, after working for HMRC for over 20 years as a tax inspector. We’ve decided to forgive him for this little transgression as his knowledge of how HMRC handle enquiries and compliance checks is really beneficial for both Qdos and our clients. Nigel specialises in employment status and has personally represented hundreds of clients who have been subject to a HMRC IR35/employment status enquiry.

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