BBC tax boss admits off-books pay deals 'cut exposure' of Corporation to tax man

 

The head of the BBC's tax department has defended the Corporation against criticism from MPs who accused it of being 'complicit' in tax avoidance.

BBC Newsnight presenter Jeremy Paxman has claimed that he had been told by the BBC to set up a company for his earnings or stop presenting Newsnight. 

 

A report by the House of Commons Public Affairs found that thousands of BBC employees, including many household names, were being paid via private companies, meaning the Corporation was not liable for their national insurance payments.

David Smith, head of employee tax at the BBC, admitted that 25,000 contracts covering around 1,500 workers had been issued on a freelance, off-books basis, but insisted the Corporation abided by the rules.

He conceded, however, that the use of so-called service companies, particularly by on-air "talent," allowed the BBC to "cut [its] exposure" in cases where the HMRC ruled that the person involved was not a genuine freelancer.

"The reason behind this is just in case HMRC were to disagree that the person was not a freelancer ... and protects the licence fee from any further exposure," he said.

Mr Smith was questioned about the BBC's tax arrangements by John Humphrys, the long-running presenter of BBC Radio 4's Today Programme, who disclosed that he himself was a freelancer, although he does not have a service company .

 

Saying that most of the 1,500 people paid through the use of such companies were "off-air" workers, such as makeup artists and cameramen, who worked on a sporadic basis, he added that most actors and musicians were accustomed to being paid as freelancers.