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Panic Among the BBC Luvvies

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Panic Among the BBC Luvvies

Old 16th Feb 2018, 05:14
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Panic Among the BBC Luvvies

I wonder how many other “contractors” working for various arms of media and government quangos will be talking nervously to their accountants and bank managers....

BBC tax panic as Look North presenter Christa Ackroyd told to pay £400,000 bill

Dozens of BBC presenters face being forced to settle substantial tax bills after a tribunal ruled that a news anchor must pay more than £400,000.

Christa Ackroyd, 60, hosted the regional news programme Look North for 12 years and was paid as a contractor through a personal service company to minimise her tax bills. HMRC argued, however, that from 2006 to 2013 she was effectively a BBC employee and was therefore liable for £419,151 in unpaid income tax and national insurance.

A first-tier tax tribunal yesterday found in favour of HMRC and ordered the presenter to pay the bill. The tribunal judge said: “We do not consider that Ms Ackroyd could fairly be described as being in business on her own account.” The ruling is a blow to other BBC presenters who declared themselves to be self-employed. It was disclosed in 2016 that more than 100 of the corporation’s past and present employees were under investigation for alleged tax avoidance over their use of personal service companies. Presenters for other media organisations are also affected.......

Judge Cannan accepted Ms Ackroyd’s evidence that the BBC suggested that she be paid through a personal service company after poaching her from Calendar, the ITV rival. Her accountant advised that the arrangement was in order. The tribunal found that she was not self-employed, because she was obliged to work at least 225 days a year and the BBC had the right to specify what services her private company would provide. Under tax rules a person is selfemployed if they can decide what work they do and when.

An HMRC spokesman said: “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.” Many freelance BBC presenters have been moved on to staff contracts after rules were changed last year to make the corporation responsible for deciding their tax status.

A BBC spokesman said: “The use of personal service companies is entirely legitimate and common practice across the industry as it provides flexibility for both individuals and organisations. An independent review conducted in 2012 found that there was no evidence that the BBC had attempted to avoid income tax or NIC by contracting in this way.”.......
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Old 16th Feb 2018, 06:31
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I'm frankly amazed at the gross stupidity this reveals. I looked into the various ways of working as a self-employed contractor after I retired, and one thing was very clear, the key definition of being self-employed as far as tax and NI is concerned is the one that the tax tribunal have highlighted. If you are working for a company or organisation that sets the days you work, then you're not. If you are working for a company that sets you a target date for delivering a package of work, but doesn't stipulate which days you work in order to deliver that, then you are.

One has to wonder at how independent that 2012 review was. In my case I knew very little about working as a self-employed contractor from the "working end" so went to an accountant to seek advice. If a small accountant used to dealing with the accounts of self-employed people knew the rules when he explained them to me, very clearly, in 2010, then how on earth could a review in 2012 not have picked this up?

From what I remember of hiring in consultants through agencies, back when I was working, we always had to specify a package, or packages, of work, with deliverables, which is what they were employed to deliver. We never had control over when the worked in detail, other than requests that they should attend certain meetings, perhaps.

It seems as if the BBC was trying to avoid paying, NI, pensions, holiday and sick pay for these individuals, every bit as much as they were trying to reduce their tax bill. Why else would the BBC suggest that a new presenter work for them via a personal service company?
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Old 16th Feb 2018, 06:52
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BBC response looks like their standard denial that they have done anything wrong.
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Old 16th Feb 2018, 07:06
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Originally Posted by 4mastacker View Post
BBC response looks like their standard denial that they have done anything wrong.
It does indeed, more so because it contradicts the findings of the tax tribunal.

This quote:

A BBC spokesman said: “The use of personal service companies is entirely legitimate and common practice across the industry as it provides flexibility for both individuals and organisations. An independent review conducted in 2012 found that there was no evidence that the BBC had attempted to avoid income tax or NIC by contracting in this way.”.......
with my added highlight, seems to indicate that the BBC are either stupid or not telling the truth. The tribunal found that the BBC had stipulated 225 working days a year (the normal employee working period is around this figure) and so, by their own definition, they were not providing flexibility to either the individuals or the organisation, they were treating them as employees. I wouldn't mind betting that 225 working days a year is pretty much what BBC employees work, as that's a 365 day year, minus 104 days for weekends, minus 36 working days for leave and public holidays. It's pretty close to the contracted time I worked back when I was working full time.
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Old 16th Feb 2018, 07:09
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This isn't a new case - it's been running for several years. She took professional advice and was told IR35 didn't apply to her, advice which (from a brief look at her circumstances) surprises me because she had no right of substitution and essentially worked in only one job, so "self employed" would have been a hard sell. But it wouldn't surprise me if she could recover some or all of her costs from the PII of the accountants who told her she could be self-employed.

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Old 16th Feb 2018, 07:10
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This has been going on for many years - well back in the last century a "self-employed" contractor who only worked for one "customer" was considered to be an employee and treated as such for tax purposes. When I first became a freelance (1990) I knew it then and was careful to show at least three customers to avoid this problem.

No sympathy at all.
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Old 16th Feb 2018, 07:32
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Forget the BBC I'd have thought the headline should read "panic amongst many pilot contractors".

This case revolved around the three cores of IR35 Mutuality of Obligation, Substitution and Supervision/Direction/ Control.

Basically if you turn up every month and they pay you every month and they control what you do and no one else can do it...you're an employee. She failed all three tests but then so would many pilot contractors.
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Old 16th Feb 2018, 07:34
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Originally Posted by UniFoxOs View Post
This has been going on for many years - well back in the last century a "self-employed" contractor who only worked for one "customer" was considered to be an employee and treated as such for tax purposes.
That was the "abuse" which Gordo sought to stamp out when IR35* was first released in 1999. There are many senior BBC journalists and on-screen staff who do many different jobs (write for newspapers, write books, do panel shows for other channels and appear on TV/Radio news) and for these people it can be sensible to be self-employed partly because it makes the tax, NI and Pension consequences less complex and partly because it avoids any risk of confusion about the "employer's rights and responsibilities" towards their other work.

But of course there are others who just do it as tax-avoidance. We are being led to believe this one falls much more into the latter than the former group.

PDR

* Which was actually just a press release reminding people what the law actually says - not ana actual change in the law
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Old 16th Feb 2018, 07:43
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Never heard of her however I bet that whenever a story broke regarding someone’s tax avoidance scheme she would be howling in revulsion at these evil people not paying ‘their fair share’.
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Old 16th Feb 2018, 07:59
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Originally Posted by PDR1 View Post
This isn't a new case - it's been running for several years. She took professional advice and was told IR35 didn't apply to her, advice which (from a brief look at her circumstances) surprises me because she had no right of substitution and essentially worked in only one job, so "self employed" would have been a hard sell. But it wouldn't surprise me if she could recover some or all of her costs from the PII of the accountants who told her she could be self-employed.

PDR
The right of substitution is just one thing that needs to be looked at as a whole when deciding whether IR35 applies on any contract.
For instance you may contract a specialist in their field to do some work for you and you would indeed expect that they would not instead substitute the office junior to do the work instead. That you would specify the work to be done solely by the specialist does not in itself make them an employee of yourself.
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Old 16th Feb 2018, 08:01
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£400,000 tax in 8 years? How much was the BBC paying a regional news person?
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Old 16th Feb 2018, 08:22
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A cool £163,233 according to the mail, more than the PM BBC presenter made to pay £420,000 in HMRC clampdown | Daily Mail Online
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Old 16th Feb 2018, 09:10
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Originally Posted by dsc810 View Post
The right of substitution is just one thing that needs to be looked at as a whole when deciding whether IR35 applies on any contract.
For instance you may contract a specialist in their field to do some work for you and you would indeed expect that they would not instead substitute the office junior to do the work instead. That you would specify the work to be done solely by the specialist does not in itself make them an employee of yourself.
Absolutely. Having a right of substitution isn't mandatory, but if you can demonstrate you do have a real right of substitution then that alone allows you to claim self-employed status. In 2003 I had a subbie working for me who was getting a little nervous on the IR35 front, but our contracts have a clause allowing substitution (within the ability of the business to accomodate it) so when he went on holiday he provided a substitute for two weeks - he gave us notice so we could do the security clearence, and he brought the guy up to speed (in his own time) on the project sufficiently to allow the three specific tasks to be completed. There were no problems and he had his evidence.

Mind you, he probably didn't need it because the previous year when he first worked for me he came through an agency which went bust owing him £3k in back-pay. So he was able to show evidence that he carried "genuine business risk" - whilst not as definitive as a real right of substitution, it's pretty close!

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Old 16th Feb 2018, 09:24
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Originally Posted by PDR1 View Post
But of course there are others who just do it as tax-avoidance. We are being led to believe this one falls much more into the latter than the former group.
Indeed. Good luck to anyone who takes calculated measures to minimise their tax liability, but they shouldn't complain if these come back and bite them.
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Old 16th Feb 2018, 09:35
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Originally Posted by VP959 View Post
I'm frankly amazed at the gross stupidity this reveals. I looked into the various ways of working as a self-employed contractor after I retired, and one thing was very clear, the key definition of being self-employed as far as tax and NI is concerned is the one that the tax tribunal have highlighted. If you are working for a company or organisation that sets the days you work, then you're not. If you are working for a company that sets you a target date for delivering a package of work, but doesn't stipulate which days you work in order to deliver that, then you are.

One has to wonder at how independent that 2012 review was. In my case I knew very little about working as a self-employed contractor from the "working end" so went to an accountant to seek advice. If a small accountant used to dealing with the accounts of self-employed people knew the rules when he explained them to me, very clearly, in 2010, then how on earth could a review in 2012 not have picked this up?

From what I remember of hiring in consultants through agencies, back when I was working, we always had to specify a package, or packages, of work, with deliverables, which is what they were employed to deliver. We never had control over when the worked in detail, other than requests that they should attend certain meetings, perhaps.
Hmmm ? that's interesting to learn, in several respects.

How were you paid, and by whom for example, when working for the BBC in a capacity totally unrelated to your former area of expertise with the Gov't and likewise the stint with RTE. I believe the Broadwater Farm estate was mentioned with regard to the former for example.

Also, having worked as a contractor who was set very specific days / times and hours to be worked, I never had any problems with being defined as a contractor.

As for the infamous IR35, for those on here taking the opportunity to indulge in the opportunity to berate the BBC, this little ruling also affected a considerable number of engineers who were happily earning a living on "the circuit " when it was in its glorious prime.

The moral being you didn't / don't have to be paid a high level of remuneration to have been affected.

Last edited by Krystal n chips; 16th Feb 2018 at 09:47.
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Old 16th Feb 2018, 10:07
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It all started in the 70s with the building sub-contractors having to obtain a '714' certificate from HMRC to show to the main contractor that as a sub-contractor you were confirmed by HMRC as paying your NI and tax and could be paid in full instead of the contractor having to deduct around 30% of your money to send directly to HMRC. So called 'false self-employment' was rife.

Some years later IT contractors working normal business hours and for just one company were hit and my neighbour had to become employed by the company he worked for instead of avoiding PAYE etc as a contractor.

There is a steady drive to eliminate false self-employment.
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Old 16th Feb 2018, 10:39
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Shouldn't 'self-employed' pilots, contracted by an agency to deliver all their available working hours to one airline, be amongst the first in line to feel the pinch?
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Old 16th Feb 2018, 10:54
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Originally Posted by M.Mouse View Post
It all started in the 70s with the building sub-contractors having to obtain a '714' certificate from HMRC to show to the main contractor that as a sub-contractor you were confirmed by HMRC as paying your NI and tax and could be paid in full instead of the contractor having to deduct around 30% of your money to send directly to HMRC. So called 'false self-employment' was rife.

Some years later IT contractors working normal business hours and for just one company were hit and my neighbour had to become employed by the company he worked for instead of avoiding PAYE etc as a contractor.

There is a steady drive to eliminate false self-employment.

When I was working we had IT sub-contractors, but my understanding is that their whole area of work had been contracted out to the IT company they worked for. I assumed that the contract was "for provision of IT services" to a defined contractual requirement, rather than for the provision of staff to run the IT section.
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Old 16th Feb 2018, 11:13
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Originally Posted by ORAC View Post
I wonder how many other “contractors” working for various arms of media and government quangos will be talking nervously to their accountants and bank managers....
Fair enough to fight IR35 - lots of people do win, after all - but it's hardly credible that a freelancer these days isn't well up in all the implications.
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Old 16th Feb 2018, 11:42
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Was she claiming to be self employed? Or was she an employee of a personal service company?
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