BBC helps its chief to avoid tax: Exclusive: Birt's salary paid to his private company

JOHN BIRT, the new Director-General of the BBC, has avoided tax by being paid as a freelance consultant - despite being a full-time employee of the Corporation. Instead of paying tax on his BBC salary, he has been taxed on whatever he chooses to pay himself from his private company.

According to the BBC, details of Mr Birt's pay as Director-General have still to be finalised. He took over his new job at Christmas instead of next month, as planned. But for six years as Deputy Director-General he was paid through his private company.

Mr Birt, 48, joined the BBC as Deputy Director-General from London Weekend Television in 1987. Famed for a meticulous and analytical approach, he aroused controversy by streamlining BBC News and Current Affairs. He is expected to remain Director-General until the BBC's charter comes up for renewal in 1996.

Because celebrities are paid from a variety of sources - books, personal appearances, films and records - they are usually given freelance contracts, as are producers of one-off programmes. But it has now emerged that senior BBC executives, who neither appear in programmes nor produce them, enjoy similar treatment.

Documents filed at Companies House show that, as Deputy Director-General, Mr Birt was paid gross by the BBC and then claimed a long list of items against tax, including designer suits and visits to the theatre.

Mr Birt has a private company, John Birt Productions Limited. It was formed in 1980 and has two shareholders: himself and his wife, Jane, a painter. The company gives its principal activity as 'providing consultancy services in the field of theatres and television'. Its address is Mr Birt's home in south-west London. He does not list the company in his Who's Who entry.

In the year ending 31 August 1991 John Birt Limited reported a turnover of pounds 163,141. By far the bulk of this was Mr Birt's salary as Deputy Director-General. The BBC does not disclose the salaries of its senior executives, but its latest annual report said that the highest-paid member of the Board of Management - presumably Michael Checkland, the Director-General - earned pounds 149,148. The next highest - presumably Mr Birt - received between pounds 135,000 and pounds 140,000.

Set against the turnover of John Birt Limited are 'administration expenses'. These include:

Pounds Secretarial assistant. . . . . . . . . . . . . .15,000 Wardrobe. . . . . . . . . . . . . . . . . . . . .3,666 Travel, accommodation. . . . . . . . . . . . . . 8,791 Lighting and heating. . . . . . . . . . . . . . .1,127 Motor expenses. . . . . . . . . . . . . . . . . .2,612 Telephone and postage. . . . . . . . . . . . . . 1,501 Books and journals. . . . . . . . . . . . . . . .1,350 Entertainment. . . . . . . . . . . . . . . . . . 2,366 Sundry expenses. . . . . . . . . . . . . . . . . . 316 Insurance. . . . . . . . . . . . . . . . . . . . . 989 Cleaning. . . . . . . . . . . . . . . . . . . . . .920 Theatre visits/research. . . . . . . . . . . . . . 340 Depreciation. . . . . . . . . . . . . . . . . . . .300

The expenses also include payment of salaries to Mr Birt and his wife of pounds 59,000 and pounds 14,000 respectively, a pounds 36,167 contribution to his private pension plan, pounds 7,604 National Insurance contributions and pounds 3,100 accountancy fees.

After deducting the pounds 159,174 in expenses from turnover, the profit of John Birt Limited was pounds 3,967. The company paid no corporation tax on the profit, however, because of the deduction of capital allowances and losses carried over from previous years.

Instead of paying tax on his six-figure BBC salary under PAYE, Mr Birt paid tax only on the salary he awarded himself as a director of his company, pounds 59,000.

Barry Kernon of Kernon & Co, an accountancy firm that acts for many writers and broadcasters, said: 'It is a little unusual for the earnings of an individual in a senior managerial position in a corporation to be paid through a company he controls. In the normal way, I would expect this to be treated as a salary and for this to be taxed under PAYE.'

A BBC source said that by being paid this way, Mr Birt would save the BBC from paying National Insurance on his salary. He added: 'All these efficiency measures to which we are submitting ourselves are being driven by him. As you can see, he has a certain amount of expertise in this area.'

An Inland Revenue spokeswoman said she could not comment about an individual's tax affairs, but the BBC was treated like any other employer. 'Whether you are self-employed or PAYE is a matter of fact and that is all,' she said.

The Inland Revenue, she explained, has criteria for determining whether people can be classed as self-employed or as employees. People are generally judged to be self-employed if they risk their own money in the business; if they are free to hire other people; and if they have the final say in how the business is run. Employees are generally judged to be people who have to do the work rather than hire someone else to do it for them; who work set hours and at the premises of the person or organisation they are working for.

Mr Birt would not speak directly, but a BBC spokesman said: 'Arrangements of this kind are not unusual in the broadcasting and entertainment industry, and John Birt has been either a freelance or has contracted his services through his own company on fixed-term contracts for over 20 years. The same contractual arrangements that operated when he was director of programmes at LWT applied when he joined the BBC as Deputy Director-General.'

(Photograph omitted)

News
Actor Burt Reynolds last year
newsBurt Reynolds, once among the most bankable actors in Hollywood, is set to auction his memorabilia
News
Gordon and Tana Ramsay arrive at the High Court, London
newsTV chef gives evidence against his father-in-law in court case
News
people

Watch the spoof Thanksgiving segment filmed for Live!
News
The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
books'It's a simple, sweet and charming tale; it’s very heartfelt'
News
i100
Arts and Entertainment
One of the installations in the Reiner Ruthenbeck exhibition at the Serpentine Gallery
artCritics defend Reiner Ruthenbeck's 'Overturned Furniture'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Opilio Recruitment: UX & Design Specialist

£40k - 45k per year + Benefits: Opilio Recruitment: A fantastic opportunity ...

Opilio Recruitment: Publishing Application Support Analyst

£30k - 35k per year + Benefits: Opilio Recruitment: We’re currently re...

Opilio Recruitment: Digital Marketing Manager

£35k - 45k per year + benefits: Opilio Recruitment: A fantastic opportunity ...

Opilio Recruitment: Sales Manager

£60k - 80k per year + Benefits: Opilio Recruitment: A fantastic opportunity ...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game