John Birt's Taxes: Review of accounts reveals saving of 810 pounds

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The Independent Online
ACCOUNTANTS acting for John Birt, the BBC's Director- General, insisted last night that he had made a saving of only pounds 810 in the year to August 1991 from paying tax through his private company.

'A lot of people have misunderstood the fact that things which went through the company may have been tax deductible, but they were later taxed on (Mr Birt's) income as benefits in kind,' according to Barrie Akin, a tax partner with Ernst & Young, the firm called in to study his accounts.

Mr Akin, who has led a team examining the books of John Birt Productions Ltd since the end of last week, refused to discuss individual items listed in accounts as company expenses, but he insisted that a thorough examination had revealed only a tiny saving.

Tax returns submitted by the company and Mr Birt were different from the accounts filed at Companies House and reflected the amounts taxed on Mr Birt as 'benefits in kind', Mr Akin said.

A statement from Ernst & Young said: 'We have calculated the total liabilities arising in respect of the year ended 31 August 1991 as a result of the current arrangements, including corporation tax, PAYE, National Insurance contributions and Mr Birt's wife's tax liability on income from the company (arriving at the figure) pounds 41,616. Had Mr Birt been an employee of the BBC receiving a salary equal to the basic fees payable to his company, his tax liability for the same year would have been pounds 45,551.'

The saving, pounds 3,935, was reduced to just pounds 810 when accountancy fees were deducted. Administration expenses included in accounts filed at Companies House cover pounds 3,666 for clothing; pounds 8,791 for travelling and subsistence; pounds 1,127 for lighting and heating; pounds 2,612 for motor expenses; pounds 1,501 for postage and telephone; pounds 1,350 for journals and subscriptions; and pounds 2,366 for entertaining. Mr Birt's company pension plan amounted to pounds 36,167; audit and accountancy at pounds 3,100; insurance and cleaning at just under pounds 2,000 and theatre visits and research at pounds 340.

The Independent asked a senior tax expert to examine the expenses and he estimated that the savings to Mr Birt in tax payments were in the region of pounds 8,250. However, the cost of operating as a company - accountancy fees and the payment of 10.4 per cent employer's rate National Insurance contributions - brought the saving down to about pounds 900 - broadly in line with the Ernst & Young figure. The pension figure would be the same whether Mr Birt was employed or self-employed.

But doubts still remain over some of the expenses claimed. Our expert said the claims for lighting, heating and clothing may not be unjustifiable if Mr Birt had been an employee of the BBC, instead of a freelance.

It is not known, however, whether these are the items which Ernst & Young said were later taxed as benefits in kind.

The expert said travelling and subsistence, telephone charges, entertainment and theatre visits would probably have been approved because of Mr Birt's position. However, he was unsure about cleaning bills.