Review of BBC's freelance engagement model - on air talent

In July of this year the BBC announced it was establishing a review into the way it contracts freelancers and how it pays individuals through service companies. The review, which was conducted independently by Deloitte, found no evidence that the BBC has attempted to avoid income tax or National Insurance Contributions (NIC). It also found that the BBC has a high standard of tax compliance and recognised that retaining a freelance model is critical for the success of the BBC. Engaging freelance workers through Personal Service Companies is legal and entirely appropriate in many circumstances.

Every year the BBC engages around 64,000 freelancers. Most of these are covered by existing HMRC guidelines and so the nature of the contractual relationship and their tax status is straightforward.
However, some individuals - notably on-air TV presenters - fall outside HMRC's current guidelines, so our policy has been to engage these through personal service companies. We did this to protect licence fee payers from any liability if there was any misclassification of their tax status. However, we recognise that this policy was sometimes applied inconsistently; with a mix of on air talent engaged as staff, self-employed or through PSCs; where talent were sometimes doing similar work. In some cases some of the on air talent appear to have the characteristics of 'staff' and might be expected to be engaged as employees.

So what we'll be doing is this:

• We will develop and apply a new employment test to all on-air and off-air talent paid via service companies and as a priority we will review 804 existing on air talent paid either through PSC or as self-employed contractors who receive over 50,000 a year. This is likely to result in a number being offered staff employment when their current contract expires from the new financial year. However each freelancer has different circumstances and we will be speaking to all those affected individually to ascertain what is the most appropriate status for them. We intend to make any changes at no net increase in costs to the BBC.
• We will also work with HMRC to develop new objective criteria for the tax treatment of on-air presenters where none currently exist, this will serve as a model or 'modus' for the BBC and potentially the rest of the broadcasting industry.
• We will still continue to use PSCs in certain limited circumstances. We will strengthen our reporting to HMRC on these occasions, going further than the Government's Alexander Review recommendations on the level of detail we will provide. The clauses we have in our contracts with freelancers on tax/NIC compliance will also be strengthened.

We will begin work implementing these changes immediately. However, because there is no legal basis for terminating contracts early, moving individuals with existing contracts from service companies to BBC staff or self-employed individuals will take place as their current contracts expire.

What does this mean for you if you are a freelancer paid via a service company? This is a new policy so we can't comment on individual contracts or deals right now. Contracts will not change until they are up for renewal and so you may not be affected for some time depending on your personal circumstances. It should also be noted that our new employment test doesn't necessarily mean your contractual status will change.
We will contact you individually so that we can discuss in more detail what this could mean for you. In the meantime, do get in touch with your usual BBC contact, if you have any questions.

The report can be found here: http://www.bbc.co.uk/aboutthebbc/insidethebbc/howwework/reports/bbc_freelancers_report.html