The BBC's 'cack-handed' approach to IR35

The BBC's 'cack-handed' approach to IR35 is a severe warning to others

The reputation of The BBC took yet another nosedive earlier this week, with the grim reality of its reported handling of presenters’ IR35 status coming to light. But after apparently using its weight to ‘force’ hundreds of workers into operating through PSCs, this UK ‘institution’ as it has often been described, has created a rod for its own back.

Therefore, it is the people impacted by The BBC’s poor judgement who need support. The financial implications of incorrect IR35 decisions carry a huge burden, which can wreck the personal lives of the individuals left to pick up the pieces.

Only hours after it was suggested that an unnamed BBC presenter had attempted suicide because of the organisation’s ill-judged handling of her tax affairs, this week, other journalists spoke out at a committee held by The Department for Digital Culture, Media and Sport (DCMS). Incidentally, The BBC chose not to attend.

Moneybox presenter and BBC journalist, Paul Lewis, set the scene, describing The BBC’s behaviour as ‘cack-handed’ as bosses ‘forced’ presenters to work self-employed, through their own limited companies.

It is claimed this happened without as much as a glance into whether these working arrangements resembled employment or self-employment. Apparently, it was BBC policy to push presenters into working via a PSC so the organisation could avoid paying employee taxes or offer employment rights.

It also emerged that The BBC inserted clauses in contracts following public sector reform last April to make sure any IR35 liability still rested with its workers, and not the organisation.

Regional radio broadcaster, Liz Kershaw, was also present at the committee, and went on to compound The BBC’s handling of IR35. After reading out the dictionary definition of ‘forced’, in which the term ‘coerced’ was also discussed, she explained that she ‘had to set up as a limited company otherwise they (The BBC) could not engage me as a presenter.’ 

It didn’t stop there either. Journalist and broadcaster, Kirsty Lang, revealed she had no choice but to work through cancer treatment after The BBC insisted she give up her employed status and operate through a limited company upon requesting to go part-time. She explained that she had ‘trusted The BBC’  but now feels ‘hung out to dry.’

It is clear The BBC now has a fight on its hands to rebuild its reputation, not just among its workers, but the licence payers too. And rightly, there have been calls for the organisation to pay any tax bills presenters might face following an IR35 enquiry. We’re told it’s considering this.

However, these calls play right into the hands of HMRC. After all, it was only last year that the Government amended public sector IR35 which passed the tax liability to the engager - changes which are expected to be extended to the private sector before long.

Despite The BBC’s half-hearted attempts to advise presenters to speak with an accountant when starting new contracts, it was evident from the committee meeting that these workers weren’t clear on the requirements nor the ramifications of operating through a limited company. They didn’t know that by working self-employed, The BBC no longer had any responsibility to help them either.

This led to hundreds of presenters being tied up in company structures they did not want or appreciate. In turn, they now find themselves ‘employed for tax purposes’, but without any of the employment benefits many of their colleagues enjoy.

In the committee meeting, BBC presenters also discussed the flaws of HMRC’s CEST Tool, which they argued is not relevant to their profession or role. Paul Lewis described it as the ‘impossible test’, while Kirsty Lang made it clear that it is ‘not fit for purpose’.

Regardless of whether these presenters were given a choice in setting their IR35 status, it was argued that CEST is a ‘one-size-fits-all’ assessment that cannot be relied on to provide accurate IR35 determinations.

The vast majority of freelancers and contractors are in agreement with this. 81% of the 1503 independent workers surveyed by Qdos Contractor in February of this year, revealed they would be deterred from taking on a client if CEST was the only method used in an IR35 assessment.

The Government has promised to review the tool, but to this day, CEST remains unreliable. That said, it isn’t mandatory, and public sector engagers and private sector contractors can carry out independent IR35 decisions.

The BBC has been accused of ‘bullying’ workers into setting up limited companies for its own financial gain, delivering an ultimatum: do it their way or don’t work with them at all. And for years, this bad practice went unnoticed, until HMRC investigated Christa Ackroyd’s working arrangement, which subsequently blew the lid off everything.

Should it be concluded that The BBC coerced presenters into working self-employed, knowing the working relationship reflected employment, it would seem highly unfair of HMRC to make these presenters pay any IR35 fines. However, the rules are clear, stating that any limited company director is responsible for their own taxes (prior to public sector reform in April 2017).

While it seems there’s nothing stopping a client from asking workers to operate this way, bullying them into it is another matter altogether. And in this particular case, it’s an incredibly short-sighted move from The BBC.

From top to bottom, the organisation relies on its contractor workforce for flexibility and expertise. These individuals are the faces and voices of the organisation, and their personal lives have been impacted in The BBC’s attempt to protect its own financial health.

The case continues...