The BBC’s use of personal service companies to hire freelance staff has “adversely affected its relationship with some of its presenters”, a National Audit Office report has found.
The corporation has paid out loans totalling £2,550 to three freelances on PSCs who were struggling with “short-term cash-flow problems” as a result of being taken off the company’s payroll.
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By August 2018 it had paid out almost £12,000 in contributions towards additional book-keeping fees, the report states.
As of last month, there were about 100 open investigations into BBC-related PSCs, the NAO said. In June the BBC was yet to recoup £2.9m in tax paid on account, partly due to concerns raised.
The NAO report said: “By May 2018, the BBC estimated that some 800 presenters, nearly 300 of whom were hired through PSCs, warranted further review as they were at risk of being challenged by HM Revenue and Customs.
“This could involve tax arrears for the BBC and for the PSCs.”
The report said some individuals claim they only started operating through PSCs “because the BBC required them to” and that they “also feel that they received misleading or limited information from the BBC”.
It claims the BBC said it required these people to set up PSCs “as they had most knowledge of their own circumstances and were best placed to ensure the correct payment of tax”.
A PSC is a limited company that typically has a sole director who owns most or all of the shares of the company and who provides their services to clients via a contract between the client and the PSC.
According to the NAO, PSCs are a “legitimate way of contracting for services and are commonplace across many sectors, including the media industry”.
The investigation into freelance hiring at the BBC was carried out at the request of the Digital, Culture, Media and Sport Select Committee chairman.
The Public Accounts Committee first addressed the BBC’s use of PSCs in 2012 as part of a wider enquiry into off-payoll working in the public sector.
An open letter from a group of presenters in March 2018 raised concerns with how the BBC handled changes to the law on PSCs brought in last year.
Meg Hillier MP, PAC chairman, said: “The PAC raised concerns about the BBC’s use of personal service companies six years ago.
“It is worrying that, six years on, the mess of clarifying the employment status for tax purposes of people the BBC hires through PSCs has not been fully untangled.”
“With around 100 investigations into PSCs still outstanding, the BBC and HMRC must work together to ensure certainty for freelances working for the BBC – particularly for those freelances who have been left in desperate circumstances.”
A BBC spokesperson said: “As the NAO recognises, personal service companies are a legitimate way of contracting for services used by many across the media industry.
“However, determining whether an individual is employed for tax purposes is complex and in managing this we have always sought to balance the interests of our workforce and the licence fee payer.
“We recognise there are still issues to address and remain committed to resolving them. We are currently in discussions with our presenters and are actively engaged with HMRC to explore the options for resolution.”
Picture: Reuters/Neil Hall