Now Government to investigate BBC off payroll activity
Posted Jul 11, 2012
The investigation into the use of limited companies by some public sector workers is set to continue, as the attention of the House of Commons public accounts committee turns to the BBC.
Exaro, the investigative news site that first broke the Ed Lester story earlier in the year, says that local government bodies and the nation's broadcaster will be the next targets for scrutiny into 'off payroll remuneration', possibly after the summer recess.
Public outcry over 'off payroll' payments
In January, Exaro and Newsnight revealed that Lester, head of the Student Loans Company, had been paid via his own personal service company for over a year, potentially saving thousands in tax and National Insurance liabilities compared to employees who were on the payroll.
As a result of the public outcry caused by this revelation, Danny Alexander (Chief Secretary to the Treasury) ordered a cross-department audit to establish how many other public sector workers were paid in a similar fashion.
In May, the audit determined that over 2,000 individuals were being paid 'off payroll', with 80% on assignments lasting 6 months of more, and 75% earning over £380 per day. An estimated 40% of those identified by the audit are thought to be IT contractors, working via their own limited companies.
Subsequently, the Treasury has ordered a clampdown on the hiring of individuals who work via personal service companies in the public sector, as well as a consultation into the taxation of 'controlling persons'.
BBC under scrutiny
According to Exaro, attention has now turned to the BBC and Local Government Association, as the findings of the initial audit are not thought to have been thorough enough for the cross-party committee, which is chaired by Margaret Hodge MP.
In March, responding to a FOI request by David Mowat MP, the BBC stated that it remunerated 3,000 individuals via their own limited companies, 31 earning over £100,000 per year and 5 earning over £150,000 per year.
However, the broadcaster said that the use of personal limited companies is widespread within the media industry, and is an entirely lawful practice (as it is).
You can read the full BBC story here (you need to subscribe for free to view the article in full).
Interestingly, the remuneration practices of the BBC first came into the spotlight in 2009 after The Times revealed that a million pound presenter such as Jeremy Paxman would save over £100,000 in tax by working through a limited company compared to the PAYE route.
At the time, a BBC spokesman again stated that many individuals in broadcasting and other sectors set up service companies, "...and this is perfectly lawful."
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