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One in three BBC presenters works through service companies

BBC has 148 presenters working ‘off payroll’, financial chief admits to astonished MPs

By David Hencke | 16 July 2012

“Is this not unacceptable for a public corporation to do this?”
– Margaret Hodge, chairwoman, public accounts committee, talking about the BBC’s use of service companies

BBC chiefs today admitted that 148 presenters work at the broadcaster through personal-service companies and ‘off payroll’. The figure represents nearly one in three presenters working for the BBC.

The admission came from the BBC’s chief financial officer, Zarin Patel, under tough questioning this afternoon from MPs on the House of Commons public accounts committee.

Patel also undertook that the BBC would review its use of personal-service companies.

But she told the committee that the use of service companies is standard practice in the broadcasting industry, and was within guidelines issued by HM Revenue & Customs (HMRC).

Margaret Hodge, a Labour MP and the cross-party committee’s chairwoman, questioned why the BBC should use mechanisms that enabled tax to be avoided.

She told Patel of the case of a news presenter who had worked for the BBC for more than 20 years and had been pressured to work through a service company instead of paying tax under the ‘pay as you earn’ (PAYE) system.

“He told me in confidence that he was being pressured by his boss to stop paying PAYE and use a personal-service company. He did not want to do this, but the BBC told him that this was an acceptable way to do this by HMRC.

“Is this not unacceptable for a public corporation to do this?” she asked.

Patel said: “There is no difference to the HMRC whatever way this is done.”

This led to a sharp exchange with Hodge, who insisted that the BBC could not possibly know this.

Hodge also asked: “In view of public concern over employers meeting their own – and their employees – tax contributions, are you going to review the BBC’s use of personal-service companies?”

Patel replied: “We will, and with real seriousness.”

Exaro revealed in March that around 3,000 people working for the BBC are paid through service companies, with five earning more than £150,000 a year without having tax deducted at source through the ‘Pay as You Earn’ (PAYE) system. Another 31 people earn more than £100,000 a year under similar arrangements at the broadcaster.

But these figures excluded ‘talent’, such as presenters. The committee’s questions today extracted new details about the number of presenters working through service companies.

Other new material given by the BBC to the committee and passed to Exaro shows that the five earning more than £150,000 a year include an IT contractor and a project manager. The other three, engaged via a recruitment agency, are an IT contractor, a producer and a project manager.

New figures also show that the BBC pays between £110,000 and £150,000 a year to 10 people via service companies. They include a casting director, executive editor, executive producer, producer, a producer/director, production manager, series producer, director/editor, plus five further editors paid through a recruitment agency.

Patel disclosed under questioning today that the BBC also has 148 presenters paid more than £50,000 a year working through service companies. This was out of a total of 467 presenters, she said.

The disclosure led to MPs questioning how a permanent, news presenter could be paid in this way.

A Conservative MP on the committee, Stephen Barclay, took Patel through a standard ‘off payroll’ BBC contract and pointed out that it restricted people from working for rivals. He said that it looked like a contract for an employee.

Danny Alexander, chief secretary to the Treasury, had wanted the BBC to be included in a Whitehall review of ‘off payroll’ contracts for public officials. However, Jeremy Hunt, culture secretary, pointed out that ministers could not order the BBC to review its contracts.

The BBC came to an agreement with Hunt to disclose only that all members of its executive board are on the payroll, and no further action was requested by Whitehall.

The committee was this afternoon also due to question senior figures from Whitehall and HMRC, as well as the BBC and local government, after summoning them to answer questions over ‘off payroll’ contracts.

The hearing was triggered after an investigation by Exaro, together with BBC2’s Newsnight, revealed in February that the Student Loans Company was paying its chief executive, Ed Lester, through a service company without deducting tax or employee’s national insurance under concessions granted by HMRC.

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By Exaro News

Exaro News investigates matters of public interest and seeks to uncover the truth.