More unrest at the BBC – now it’s about personal service contracts and a word of warning about the ostensibly self-employed
Perhaps the most surprising aspect of “employment” provided through personal service companies is that such arrangements have lasted as long as they have.
When the BBC first published the salaries of its top presenters last year there were some notable omissions. For example David Dimbleby didn’t appear on the list. Why? Because he is paid by the BBC through a separate production company. Similar arrangements are in place for Lord Alan Sugar, John Torode and Gregg Wallace.
For years the BBC has encouraged and, some have argued, mandated some of their key talent to be paid through a personal service company. The idea is that the company provides the services of, say, the presenter to the BBC and the BBC therefore pays the company for the services provided. The upshot is that the presenter benefits from the lower tax regime for limited companies (currently 20%) rather than the higher personal tax rates of 40% over £45,000 and 45% over £150,000.
Unsurprisingly, HMRC have been chipping away at such arrangements for a number of years and, as far as the BBC is concerned, matters recently came to a head with a victory in the High Court against BBC Look North presenter Christa Ackroyd. Ms Ackroyd was sacked by the BBC in 2013 after HMRC demanded unpaid taxes from her on the basis that she was, in reality, an employee of the BBC and therefore required to be taxed under Schedule E. Her HMRC appeal was unsuccessful and she is now facing a bill for £419,151 in back taxes, plus undisclosed legal costs. An HMRC spokesman reiterated their long held view that “employment status is never a matter of choice…It is always dictated by the facts and when the wrong tax is being paid we put things right”.
You may take the view that Ms Ackroyd had tried it on and been caught out but, as is so often the case, it is by no means that straightforward and the BBC is very much under scrutiny as a result of its actions.
I’ll start with the big headline: Employment Tribunal claims (brought by individual Claimants) increased by 90% in the period between October to December 2017 (in comparison with the same period in 2016). To cut a long story short, the recent abolition of Employment Tribunal fees has led to Tribunal claims nearly doubling.
I think that most employers would take the view that the principle that employees should be paid a fair wage for their work is one that should be supported. However, sometimes a one size fits all approach can throw up anomalies. I should be clear: I’m not talking about those who exploit people to work excessively long hours for very poor pay (as low as £2.00 per hour), often in plainly unacceptable working conditions. I’ve written in this blog about people who have been kept effectively as slaves in the most appalling circumstances and these employers should be rooted out and dealt with severely, where appropriate in the criminal courts.