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BBC to review pay procedures after tax claims

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BBC logo at BBC Television Centre

© Rex Features

The BBC is to review the way it pays its top TV and radio stars over public concern that some of the corporation's employees have been staying off the payroll to dodge paying tax.

Bosses at the BBC said that that only 148 public faces were employed through personal service companies (PSCs), and this was just because it was the industry norm and not designed to help them avoid tax.

But at least one person told a committee of MPs that he was "bullied" into staying off the BBC payroll in order to sidestep the taxman.

The BBC's chief financial officer Zarin Patel said that the public concern about people using arrangements such as PSCs meant that she would review whether it was the right way forward for the licence fee-funded broadcaster.

PSCs are a legal way for people to be paid wages, but not pay income tax and national insurance contributions at the source. This allows them to reduce their own taxes by means of expenses and deductions.

A controversial case of a public service worker on a deal allowing them to significantly reduce their tax bill recently led to the revelation that more than 2,000 public officials are also on similar arrangements, resulting in a government crackdown.

There have also recently been media headlines about major stars such as Jimmy Carr and Gary Barlow allegedly using schemes to slash their tax bills, in practices that are not illegal but considered unethical by some.

> BBC broadcaster John Simpson admits tax avoidance
> Frankie Boyle denies tax avoidance claims

Speaking yesterday (July 16) at the Commons Public Accounts Committee, Patel said: "With the amount of public concern expressed today, I think I have to say yes, we will review it, and we will review it with real seriousness.

"But can I emphasise that none of this is designed to avoid tax. That is not why we use an extensive number of freelance contracts at the BBC."

The committee also heard from an unnamed BBC presenter who alleged that he had been told to use a PSC.

In written evidence, the corporation insisted that it was not aware of anyone that was eligible to be on its payroll but had been denied the status of a permanent employee.

But committee chair Margaret Hodge said that she had been informed that a long-term BBC presenter had been told to go "off books into a service company" or he would face a "substantial pay cut".

"He was told he would not be employed unless he did that, and when he asked for that to be put in writing, that was refused to him," she said.

BBC logo
"He was told by the person whom he was negotiating with - he works full-time with the BBC, has no other employment, has been on his contract for probably getting on for 20 years - 'Don't worry, if you have a service company HMRC is much less likely to investigate you'."

Hodge warned Patel that the individual she had talked to felt "very bullied" by the obligations put before him.

"I am anxious to establish whether you, as the employer, feel completely satisfied that all these presenters, all these people working as producers, directors, whatever - they are the face of the BBC many of these people - are you satisfied you are working within the law?" she asked Patel.

The BBC executive responded: "Yes I am. Nothing we do is designed to avoid tax."

PA reports that 41 "off-payroll" freelancers at the BBC earned £100,000 or more last year, and so did not pay tax at source. Five of these people apparently earned more than £150,000.

A further 318 people earned more than £50,000 but did not pay tax at source, according to statistics revealed following a freedom of information request by Conservative MP David Mowat.

Yesterday, the BBC announced that it reduced the amount it paid its top stars by £9.5 million in the financial year 2011/12, although the corporation still had 16 individuals earning more than £500,000.

> BBC defends Olympics staff numbers for London 2012

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