BBC to be quizzed on employees who minimise tax

BBC executives will today be quizzed over the "multitude of different ways" their employees, including presenters, pay less tax.

The Public Accounts Committee (PAC) is to take evidence from BBC chiefs over what one committee source said was a "big issue". The witnesses called will include the BBC's chief financial officer Zarin Patel and head of employment tax, David Smith.

"The BBC appears to have a multitude of different ways they ensure people pay less tax. Either they use a service company or pay them on freelance contracts or pay them through personal companies, or they pay them goodness knows how," the source said.

The Committee will not yet look at tax-avoidance schemes. "We're coming back to that in the autumn," the source said.

The PAC is chaired by Margaret Hodge and includes the Economic Secretary to the Treasury, Chloe Smith, Stewart Jackson and Ian Swales.

The hearing into off-payroll public-sector pay arrangements was scheduled following the publication of a report into the practice, overseen by Danny Alexander the Chief Secretary to the Treasury, in May.

This followed the report's findings that 2,400 senior public officials earning £58,200 a year were paying the lower level of corporation tax rather than higher rate tax because they were paid as off-payroll consultants.

Mr Alexander said at the time: "It's clear that off-payroll engagement without sufficient transparency has been endemic in the public sector for too many years." It did not include the BBC or local authorities.

A Freedom of Information request to the BBC revealed that 36 employees earning more than £100,000 were paid through personal service companies, with a total of 300 employees paid in the same way.

The off-payroll format is not illegal, but the source said: "Nobody should be avoiding tax. If your income comes from taxpayers' contributions, you have a moral imperative to ensure you are paid in a way that meets tax liabilities. You should lead by example."

But a BBC spokeswoman said last night that using service companies meant staff could be "flexible" in how they worked. She added: "They are not used as a way to avoid paying National Insurance employer contributions which are paid by the service company as required.

"In its contracts the BBC also stipulates that individuals must pay the appropriate amount of tax and we provide HMRC with a detailed annual report of all payments made to such companies."