Thousands of BBC staff, including well-known presenters, are paid through "personal service companies" to minimise their tax bills – a practice condemned today by a parliamentary committee.
The MPs said that allowing public-sector staff to avoid tax and national insurance was "almost always staggeringly inappropriate". The BBC has revealed that 25,000 staff, including those of 13,000 high-profile individuals such as presenters, do not have tax deducted at source. About 3,000 of them are paid via personal service companies.
Under new rules, announced by Chief Secretary to the Treasury Danny Alexander in May, all senior public sector staff must be on the payroll unless there are exceptional temporary circumstances.
Departments must also seek formal assurance from contractors that they are paying full income tax and national insurance. Margaret Hodge, the a Labour MP who chairs the cross-party Public Accounts Committee (PAC), warned that the use of off-payroll arrangements gave rise to "suspicions of complicity in tax avoidance".
The BBC told the PAC inquiry its off-payroll staff were "freelance workers" and the arrangements were "a pretty standard model" in the media industry. It is conducting a detailed review of the practice.
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