BBC journalists are being questioned by the Digital, Culture, Media and Sport Committee Committee on issues surrounding pay and IR35, following HMRC's investigation into the IR35 status of BBC presenters.
This comes at a time of a high-profile case involving BBC journalist and presenter, Christa Ackroyd, who is facing a tax bill in excess of £400,000 after an enquiry into IR35 issues by HMRC.
Freelancer group, IPSE, said that the evidence presented should be a wake-up call to the Government about the dangers of rolling out the 'deeply flawed' changes to IR35 to the private sector.
Since April 2017, the IR35 status of contractors in the public sector has been determined by the client and not the contractor. On the same day as the Spring Statement last week, the Government announced its consultation on extending the changes to the private sector would be released in the 'coming months'.
During the evidence gathering sessions:
- Financial journalist, Paul Lewis, described the BBC’s treatment of its workers as ‘cack-handed’, as the organisation ‘forced’ 100s of its presenters to work through personal service companies to avoid paying employee taxes or needing to offer employment rights.
- Regional radio broadcaster, Liz Kershaw, also shed light on her experience with The BBC, explaining to the Committee that she ‘had to set up as a limited company otherwise they (The BBC) could not engage me as a presenter.’
- Journalist and Broadcaster, Kirsty Lang, also said, ‘I trusted The BBC and I feel like I’ve been hung out to dry.’ This was in relation to being told to give up her employed status and work through a limited company upon requesting to go part-time.
- Paul Lewis described HMRC’s online Check Employment Status for Tax tool (CEST), as the ‘impossible test’, while Kirsty Land called it ‘not fit for purpose’.
Not fit for purpose
Freelancer group, IPSE, warned of the dangers of extending these tests to the private sector.
Andrew Chamberlain from IPSE said: "This is further evidence of the chaos caused by the Government’s ill-judged policy to transfer the IR35 burden from the contractor to the public authority which hires them.
“The criticisms of the CEST test made are entirely accurate.
“The CEST tool cannot be relied upon to make correct determinations which is why many organisations feel forced to take a blanket approach – pushing all off-payroll engagements into IR35 unfairly.
“This has resulted in highly skilled, professional contractors fleeing the public sector, robbing it of vital specialist skills, damaging public services and leading to delays in major projects.
“We are very concerned the changes may be wreaking havoc in the NHS.
“Extending the IR35 changes to the private sector will cause further chaos, and will damage the competitive advantage of the UK workforce – its flexibility – at a time when it is needed the most.
“We’ve been trying to cram modern working practices into a rapidly aging tax system, and the cracks are starting to show.
“The UK tax system is no longer fit for purpose, it's based on an outdated principle that all income tax payers are employers or employees, which they are not."
Tax specialists, Qdos Contractor, was also highly critical of the use of CEST.
Seb Maley from Qdos Contractor, said: “The situation does not portray the BBC in good light. Under no circumstance should an engager use its weight and reputation to force a worker down one particular road to save itself money - even more so when the person has placed such trust in the organisation.
“The complex nature of employment status makes it absolutely vital that each working arrangement is assessed on a case by case basis and by experts. From what we’ve heard, it seems The BBC has completely failed to do this.
“Last year’s public sector IR35 reform means the client will now pick up the tax bill for incorrect status decisions, but given these cases happened prior to changes, it is the worker left to pay any missing tax. If presenters were ‘bullied’ into working self-employed, they cannot be expected to settle potentially colossal fines.”
Research in April 2017 highlighted that 85 per cent of contractors did not trust HMRC’s CEST Tool, and further research in February 2018 showed that 81 per cent of contractors surveyed would be deterred from working with a client if CEST was the only method used in an IR35 assessment.
Seb Maley said: “Despite promises to review the tool used to set IR35 status, CEST remains flawed, including questions that are completely irrelevant to BBC presenters. The technology has been tweaked on-the-fly and has been known to be contradictory too. But it must be remembered that it isn’t mandatory, and independent assessments are perfectly acceptable too.”
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Susie Hughes © Shout99 2018