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”.
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.
Ackroyd also received a clothes allowance, had a minimum number of hours and had to seek permission before accepting other work. These would count against self employment status.
ReplyDeleteIt appears this arrangement was the preferred method used by the BBC to avoid ‘employing’ people, no doubt to avoid their employer liabilities.
ReplyDeleteThis is one element of the so-called "gig economy". Which would be more properly titled the rigged casual employment economy. "Gig" sounds like it's all a bit of a larf or a giggle, whereas it's actually a system rigged entirely in favour of the employer or main company. Unless you earn many tens of thousands it's the junior contractee who is mug enough to shoulder the administrative burden and uncertainty. The employer is able to sack the junior, subject to contract, at any moment for any reason. In other words, it's a rigged legalised form of the old dockers welt or builders lump systems. In further words, a scam, a rip off, a spivs charter. Which is why honestly organised unions are hated by employers and are demonised in their media.
ReplyDeleteBritain has become a corrupt, deluded and mean spirited country because of it. There's no sign it will change for the better any time soon.
Meanwhile, Dooda is merely another symptomatic spiv produced by this declining nation.
It could all be so different and much better. But not while the present rotten and decaying system is tolerated.
How the BBC thought this might apply to their big names is astonishing. HMRC guidance is clear and straightforward.
ReplyDeleteThis is the guidance on whether someone is employed or not:
"Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
they can decide what work they do and when, where or how to do it
they can hire someone else to do the work
they’re responsible for fixing any unsatisfactory work in their own time
their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish
they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
they can work for more than one client"
- could you imagine any of these big names sub-contracting their work, or deciding to broadcast for longer because they needed to talk a lot long, or deciding to broadcast at a different time or from a different place? There is no uncertainty here, all of them are employed. As such they should be on PAYE. They must have assumed the law did not apply to themselves.
Here's the HMRC link:
https://www.gov.uk/employment-status/selfemployed-contractor