A long-predicted purge of the freelancing and contracting model in the public sector appears to have begun with the news that HMRC is investigating 100 BBC presenters over whether they have paid too little tax under IR35 regulations by working off-payroll via their own personal service companies (PSCs).
The development came to light after the BBC unsuccessfully argued that it should be permitted to provide witnesses to a tax tribunal in which BBC news presenters Tim Willcox and Joanna Gosling were appealing against a Revenue demand for more tax and national insurance payments. Mr Willcox and Ms Gosling had provided their services through PSCs (Tim Willcox Ltd and Paya Ltd respectively).
The Revenue’s demand covered the periods of 2006/7 to 2012/13 for Mr Willcox and 2007/8 to 2011/12 for Ms Gosling. In early 2013, the BBC adopted a new employment status test, following which both presenters became on-payroll BBC staff members.
The BBC disclosed that the taxman examined a list of 469 current and previous presenters who have been remunerated through PSCs. Of these, the Revenue placed 100 “under consideration.”
In its application to the tribunal, the BBC also revealed that HMRC had declared their intention to extend IR35 proceedings to presenters working via PSCs for other broadcasting organisations, enormously extending the scope of the investigation.
The BBC statement continued: “The appeals are therefore extremely important not only to the individuals in question but also to the BBC and to the broadcasting industry as a whole.
“The appeals are likely to be the first cases to test the freelance model in the broadcasting industry against the IR35 legislation.”
The corporation cited “serious concerns” that the evidence collected to date by HMRC is neither accurate nor comprehensive.
The Revenue’s controversial plans to reform IR35 legislation in relation to public sector contractors have come under heavy fire from a range of industry experts. Umbrella Company trade associations PRISM and the Freelancer and Contractor Services Association (FCSA), along with Umbrella Company group Unitum, the Association of Independent Professionals and the Self Employed (IPSE) and the Association of Professional Staffing Companies (APSCo), all condemned the proposals as unworkable, unnecessary and counterproductive.
Each has shown that the reforms will force contractors into becoming employees for tax purposes but will grant them none of the statutory benefits that actual employees enjoy, such as maternity leave, paid holiday leave and sick pay.
Beyond high-profile presenters, each of these bodies has advanced pressing concerns that the move will force an exodus of contracting professionals from the public sector at a time when their skills will be most acutely needed as the UK prepares to negotiate its exit from the EU.