BBC emails reveal PSCs were presenters' 'only option'

BBC emails obtained by ContractorUK can today quash speculation over whether the taxpayer-funded broadcaster forced presenters to use Personal Service Companies.

Zarin Patel, chief financial officer of the BBC between 2004 and 2013, wrote in an internal memo that setting up a PSC would be, for many presenters -- the “only option.”

Her ‘BBC and Service Companies’ email (of July 2012) is a revelation, as facing MPs’ questions in April, the BBC’s current deputy director general ducked the issue of compulsion.

In fact, Anne Bulford made no mention of the 2012 email showing PSCs were all but mandated, despite Labour’s Meg Hillier asking her if ‘many [BBC] people had to be PSCs.’

Ms Patel’s email states: “Contractors who earn more than £10,000 a year are told that we prefer them to set up a service company and, in many cases, this will be their only option.”

BBC host Joanna Gosling has outlined this ‘option’ in practical terms, saying she was told by the BBC to turn PSC, or suffer a 30% pay cut as an on-staff producer (a job she didn’t want).

Bulford’s evidence to the Public Accounts Committee came after other BBC presenters, like Radio 6’s Liz Kershaw, told DCMS select committee MPs that PSCs were imposed on them.

'HMRC withdrawing current CEST'

Now, Kershaw claims that her amusing ‘JCB story’ (she joked about turning up at BBC HQ in a digger just to pass CEST’s ‘equipment test’), has led to a review of CEST by HMRC.

She Tweeted: “Was told today by BBC exec that my ‘JCB story’…[has] resulted in HMRC withdrawing current CEST and that a more relevant version is now being devised.”

HMRC was unable to comment before ContractorUK went to press today, yet an ex-tax officer says that a version of CEST built solely for BBC usage may be waiting in the wings.

BBC presenters have mocked the current CEST, in what is the lighter side of the BBC-PSC debacle, given suicide attempts and working while bereaved due to no sick leave as a PSC.    

'Take the silver lining'

But a critic of CEST said last night that the potentially unpalatable parts of being a freelance PSC need to be noted down, as they can play a valuable part in a defence against IR35.

“A lot of the complaints [of BBC presenters at the evidence sessions with MPs] seemed to relate to poor ‘HR’ treatment,” says Matt Boddington of IR35 specialists Chartergates.

“Contractors need to make sure they don’t argue away good evidence of being in business, [such as] unpaid or late invoices, short or no-notice contract cancellations, disinterested treatment, and onerous liability clauses in contracts.

“These are all the factors that are very useful in a tribunal when demonstrating that you are not a disguised employee. So the next time the client is a bit of a pain...take the silver lining that is on offer.”

But his advice to ‘take the rough to smooth an IR35 defence’ comes too late for the BBC. In particular, 73% of PSCs now say they would refuse a gig at the BBC due to its handling of IR35.

'Contractors' waning trust in the BBC'

So not even three out of 10 PSCs would currently accept a contract with the BBC, according to research into 800 freelance workers, run by Qdos Contractor and seen by ContractorUK.

“To win back the waning trust of contractors, it’s vital that… [the BBC begins] making well-informed and ultimately, accurate IR35 determinations”, says Qdos’ CEO Seb Maley.

“And this goes for contractors currently working on projects -- as much as it does for those yet to be engaged [by the BBC].”

In line with his recommendation, the BBC has quietly taken on an employment law advisory from the private sector to ensure PSCs not already earmarked by HMRC are IR35-compliant.

The case-by-case analysis, currently largest around BBC local radio hosts, implies PSCs already on HMRC’s radar are less of a priority, although they can still use the CEDR process.

Mistakes, refusals, intervention

Mr Maley said: “The BBC looks to have made big mistakes when it comes to engaging contractors, and in particular, the presenters it has reportedly ‘bullied’ into working through their own limited companies.

“But the organisation’s reported attempts to avoid paying tax has clearly backfired, with contractors now wary about taking on projects with the broadcaster in future.”

His comments come as the BBC refused a Freedom of Information request, saying disclosing presenters’ and PSCs’ names, and how much they were paid would breach data privacy laws.

The Times has been more successful, reporting that its FoI request was honoured by the BBC, albeit only after the Information Commissioner stepped in to order the BBC to comply.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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