BBC to give freelance staff contracts after tax review

The BBC reviewed the way it paid on-air talent and freelance staff after answering questions about pay to a government committee earlier this year

The BBC has announced it will review the freelance contracts of more than 800 on-air staff being paid through their own companies.

An estimated 131 freelancers could be offered staff contracts as a result, following a tax review by accountants Deloitte and BBC auditors.

However, the BBC said there is "no evidence" it used personal service companies to help aid tax avoidance.

It commissioned the report after a government review of tax paid by staff.

The Public Accounts Committee report said too many staff, in the government and the BBC, made their own arrangements to pay tax and national insurance, which could allow them to contribute less.

The report found that in total some 2,400 civil servants were subject to such "off-payroll" arrangements.

The review of the BBC's freelance contracting arrangements, published on Wednesday, covered all staff contracted and paid in the financial year 2011/12.

Deloitte and the internal auditors identified 804 freelance talent paid more than £50,000 that year that should be the subject of the BBC's new employment test as a matter of priority.

It is estimated 131 of these could be offered staff contracts when their current contracts expire.

The BBC said this new employment test will also now be carried out on any new staff, to help move away from the practice of engaging on-air talent on long term contracts as personal service companies, when a staff contract would be appropriate.

It is hoped the changes will be in place by the start of the new tax year in April 2013.

Danny Alexander, Chief Secretary to the Treasury, welcomed the report, adding: "It is essential the public have confidence that publicly funded institutions have in place arrangements to ensure their staff pay the proper tax.

"The Government has introduced unprecedented levels of transparency into the tax arrangements of public sector workers paid off payroll. I hope when the BBC publish their new policy on freelancer engagement, it is equally as transparent."

'Inconsistent contracts'

The BBC admitted in the report that its current policy for contracting staff was "inconsistent".

The corporation added that this had resulted in on-air talent doing very similar work while being classified in a variety of ways; either as staff, self-employed or contracted through a personal service company.

"Our review shows the BBC is not using personal service companies to avoid tax or help others avoid tax," said Zarin Patel, the BBC's chief financial officer.

"Nevertheless, it shows inconsistencies in the way our policy has been applied. We are addressing this with a more objective employment test for all new contracts and by developing a new framework with HMRC for self-employed on-air presenters."

The BBC said it was making the changes to help address "the public perception that off-payroll contracts and in particular personal service companies are used to avoid tax".

It said retaining a freelance model was "critical" for the success of the BBC - and that staff would only be contracted via a personal service company when it was "absolutely satisfied" that was the most suitable method of employment.

Gerry Morrissey, general secretary of broadcasting union Bectu, said it was pleased with the results of the review.

The union, he said, "welcomes the Deloitte report's confirmation that the tax arrangements for the majority of freelances we represent are legitimate, and that these arrangements reflect their status as genuine freelances who work for multiple employers throughout the year".

"Furthermore we welcome any move to offer staff contracts to colleagues whose employment relationship with the BBC supports this."