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BBC to change policy on paying stars over tax perception BBC to change policy on paying stars over tax perception
(about 3 hours later)
BBC freelance stars such as Fiona Bruce and Jeremy Paxman who are paid six figure salaries through their own companies will be offered staff jobs, if it appears that such people who are the "face or voice" of the broadcaster would be expected to be employees.BBC freelance stars such as Fiona Bruce and Jeremy Paxman who are paid six figure salaries through their own companies will be offered staff jobs, if it appears that such people who are the "face or voice" of the broadcaster would be expected to be employees.
A BBC review of its employment policy published on Wednesday morning found that the corporation treated its stars "inconsistently" and said that it had to change a policy that benefited at least 124 on-air stars paid more than £150,000 a year, whose numbers are also believed to include Chris Moyles and Richard Hammond.A BBC review of its employment policy published on Wednesday morning found that the corporation treated its stars "inconsistently" and said that it had to change a policy that benefited at least 124 on-air stars paid more than £150,000 a year, whose numbers are also believed to include Chris Moyles and Richard Hammond.
Zarin Patel, the BBC's finance director, said the corporation was "right at the outset" to pay stars in gross through their own firms, but the use of such "personal service companies" does "give rise to the public perception that individuals use these to avoid tax".Zarin Patel, the BBC's finance director, said the corporation was "right at the outset" to pay stars in gross through their own firms, but the use of such "personal service companies" does "give rise to the public perception that individuals use these to avoid tax".
Accountancy firm Deloitte, retained by the BBC to review how it pays stars, said it found "no evidence" that the broadcaster tried to dodge paying income tax or national insurance – but that some people "considered by the public to be 'the face or voice of the BBC'" were paid through contracts when they might have been expected to be on staff.Accountancy firm Deloitte, retained by the BBC to review how it pays stars, said it found "no evidence" that the broadcaster tried to dodge paying income tax or national insurance – but that some people "considered by the public to be 'the face or voice of the BBC'" were paid through contracts when they might have been expected to be on staff.
An initial BBC review concluded that about one in six of 804 people on and off camera who were paid over £50,000 a year via "personal service companies", or who were simply self-employed, should be offered traditional employment contracts when their current arrangements to be paid in gross expire. Only stars who insist on using personal service companies will be allowed to keep them.An initial BBC review concluded that about one in six of 804 people on and off camera who were paid over £50,000 a year via "personal service companies", or who were simply self-employed, should be offered traditional employment contracts when their current arrangements to be paid in gross expire. Only stars who insist on using personal service companies will be allowed to keep them.
The BBC would not say who uses personal service companies, but Newsnight's Paxman has admitted being told by the BBC to use one, Out In The Dark Ltd. Bruce has a company called Paradox Productions, Moyles controls a company called Saviour Productions and Hammond's is called Hamster's Wheel Productions.The BBC would not say who uses personal service companies, but Newsnight's Paxman has admitted being told by the BBC to use one, Out In The Dark Ltd. Bruce has a company called Paradox Productions, Moyles controls a company called Saviour Productions and Hammond's is called Hamster's Wheel Productions.
Tax affairs for individual stars using personal service companies are primarily their responsibility and it is hard for the BBC to quantify what benefit, if any, they would derive by being paid in gross.Tax affairs for individual stars using personal service companies are primarily their responsibility and it is hard for the BBC to quantify what benefit, if any, they would derive by being paid in gross.
By law, an individual using a personal service company who has the characteristics of an employee should pay taxes as if employed – but they are allowed to claim for suits, travel and other expenses against about 5% of their income.By law, an individual using a personal service company who has the characteristics of an employee should pay taxes as if employed – but they are allowed to claim for suits, travel and other expenses against about 5% of their income.
Traditionally, the BBC had employed many people – ranging from make-up artists to its most famous names – on a freelance basis. Many people are only employed for a short period of time, or derive the majority of their income from elsewhere – but the corporation now intends to offer some staff jobs.Traditionally, the BBC had employed many people – ranging from make-up artists to its most famous names – on a freelance basis. Many people are only employed for a short period of time, or derive the majority of their income from elsewhere – but the corporation now intends to offer some staff jobs.
From 2009, the BBC pursued an aggressive policy of requiring the higher earning freelancers to be paid via personal service companies – rather than leaving them as self-employed. BBC presenters, including Paxman, complained they were given little choice but to adopt a company.From 2009, the BBC pursued an aggressive policy of requiring the higher earning freelancers to be paid via personal service companies – rather than leaving them as self-employed. BBC presenters, including Paxman, complained they were given little choice but to adopt a company.
Although Patel insisted that this policy was not an error, she said that "public unease" about tax avoidance meant that it could no longer be sustained.Although Patel insisted that this policy was not an error, she said that "public unease" about tax avoidance meant that it could no longer be sustained.
The practice had also been heavily criticised by MPs on the public accounts committee, which said use of personal service companies was a problem across the public sector.The practice had also been heavily criticised by MPs on the public accounts committee, which said use of personal service companies was a problem across the public sector.
Sue Ayton, an agent who represents presenting talent including Michael Buerk, Angela Rippon and historian Bettany Hughes, said the BBC's claim that the pay system is designed to recognise creative talent is far from the reality.
"I am surprised – no astounded – to see the BBC states it recognises creative talent when employing on-screen/radio talent because that is exactly what does not happen," Ayton added.
She said the corporation does everything to avoid rewarding expertise and talent and does not differentiate experiences when it comes to pay negotiations.
"The BBC uses every way possible (and in the process uses up a great deal of its own resources) to avoid paying people fairly, and expertise in particular areas, ratings successes, audience appreciation, and everything that would support that line has not been in evidence at the BBC for many years," Ayton said.
"The system stifles creativity and is geared towards ensuring people feel undervalued and exploited. The only creativity going on at the BBC is spent trying to find ways not to reward excellence, and to undermine presenters in radio and television so they feel they have no choice other than to accept the BBC's terms and conditions."
Other presenters Ayton has represented over the past 25 years include Peter Sissons, Jon Snow, Joan Bakewell, Nina Hossain and Jane Garvey.
BBC staff numbers and how they were paid in the 12 months to the end of March 2012BBC staff numbers and how they were paid in the 12 months to the end of March 2012
Total BBC staff: 22,013Total BBC staff: 22,013
Agency workers: 1,087Agency workers: 1,087
Freelancers used: 64,447Freelancers used: 64,447
On-air freelancers: 53,438On-air freelancers: 53,438
– Paid by personal service companies: 3,272– Paid by personal service companies: 3,272
– Self-employed individuals: 45,073– Self-employed individuals: 45,073
– Other (larger company): 5,093– Other (larger company): 5,093
On-air stars using personal service companies.On-air stars using personal service companies.
– Those receiving £50,000 to £99,999: 243– Those receiving £50,000 to £99,999: 243
– £100,000 to £149,999: 102– £100,000 to £149,999: 102
– £150,000+: 124– £150,000+: 124
Total: 469Total: 469
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