The tax authorities “won a key tribunal ruling against Christa Ackroyd, the former presenter of the [BBC’s] regional Look North programme” yesterday at the Royal Courts of Justice, as the Guardian has reported. The reason for her appearance? “Ackroyd worked at the BBC on what is known as a personal service company contract, meaning she was self-employed and using a limited company instead of being employed directly on the corporation’s payroll”. And what was the damage?
We know who you are, thanks
“Ackroyd has now lost an appeal against HMRC – which is demanding from her £419,151 in income tax and National Insurance contributions”. Ouch! But is this a one-off? Well, no it isn’t: “HMRC is in the process of investigating about 100 current and former BBC presenters, and stars from other broadcasters, over claims of tax avoidance”.
Who the “stars from other broadcasters” might be was hinted at by Jolyon Maugham, whose response was fascinating: “A whole string of cases involving broadcasters using personal service companies coming up. And the prospect of some huge tax bills: Farage, Dale, Hartley-Brewer, Livingstone and many others”. Why so?
Well, this revolves around what is known as IR35. If you work through a limited company, but your work - or, as the Christa Ackroyd case has shown, part of your work - is the equivalent of permanent employment, then that part of your work is “caught” by IR35 and it must be taxed in a similar way to a salaried employee. No payment via dividends, for instance, is permitted. No dodging NI payments is possible.
All the names Maugham has pitched have, as far as is known, a variety of income sources. But all share one factor: a significant part of their income is, or was, from a regular slot for a broadcaster. If the Christa Ackroyd case holds as a precedent, those regular berths - a weekday show, for instance - will be “caught” by IR35. And if those concerned did not treat them as equivalent to salaried employment, they’re in trouble.
Which brings us to Talk Radio’s current breakfast host Julia Hartley Brewer, who has previously admitted to paying less tax because she works through her own limited company. Ms Hartley Dooda took grave exception to any suggestion she was avoiding tax when discussing the matter recently, but did make one telling admission.
She told Maugham “I don’t channel my money anywhere. My company pays the same rate of corporation tax as any other company does … I, like all freelancers with unpredictable earnings, pay a lower rate of tax and NI as we don’t get salaries, holiday pay, pensions, sick pay, maternity pay etc”. That argument lost when IR35 was challenged in 2001.
Note the “I … pay a lower rate of tax”. That might not be a clever thing to let slip. Still, she was adamant when challenged “I pay NI and income tax. Full stop”, and frothed at one persistent Tweeter recently “You are actually libelling me. I pay NI and tax. Now fuck off”.
Whether that last one will impress HMRC, or the courts, is however not known. What is known is that Julia Hartley Dooda has admitted paying “a lower rate of tax” and her regular weekday berth at Talk Radio could find itself “caught” by IR35. Oh dear!
And there’ll be no talking her way out of that if it is. What a deserving presenter she is.