Following recent press speculation, Chief Financial Officer Zarin Patel clarified the BBCs position in relation to the use of Personal Service Companies and tax affairs in general in an all staff email sent on July 23rd.
I wanted to take the opportunity to correct misleading reports in today's media about the BBC's relationship with individuals who we pay through service companies.
Contrary to these reports, we have not told thousands of workers to go 'off the books' in order to cut our tax bill, neither are we 'avoiding national insurance' contributions by paying individuals via service companies. The facts are simply that freelance contractors who earn more than Â£10,000 a year are told that we prefer them to set up a service company and, in many cases, this will be their only option. This is for a number of reasons including the need to ensure that the appropriate amount of tax is payable by an individual.
Let me be clear, the BBC does not expect anyone to use the service company arrangement to 'dodge tax' by paying the lower corporation rate when they are not eligible to do so. Moreover, the BBC provides HMRC with details of all payments to these companies every year so that it can independently look into whether the appropriate amount of tax is being paid.
All the arrangements that the BBC uses have been designed in conjunction with HMRC. Far from being an attempt to 'dodge tax', the arrangements are designed to ensure the correct amount is payable, while ensuring that we can offer the flexibility needed in the broadcasting industry, where individuals may work with several different organisations during the year. More detailed information about the BBC's tax arrangements can also be found in my blog from earlier this month.
We will be reviewing our tax arrangements shortly, not because we have anything to hide, but because we want to be able to reassure licence fee payers that all of our arrangements are functioning correctly and appropriately. I hope that the outcome of this review will be reported with slightly greater accuracy than has been the case so far.
Kind regards, Zarin
Zarin Patel is the BBC's Chief Financial Officer
UPDATE (Thursday 26 July 2012): The Daily Mail have apologised for their article, the text of which can be found on the Daily Mail Clarifications & Corrections page.