BBC and Personal Service Companies

Today we are announcing three steps following a number of recent questions as to whether or not the BBC has some responsibility for people facing retrospective bills from HMRC after being paid through Personal Service Companies (PSC).

Published: 19 March 2018
  • We intend to set up a fair and independent process under the supervision of the Centre for Effective Dispute Resolution (CEDR) to determine the right approach in cases where on-air presenters believe the BBC bears some liability in relation to demands for Employers’ National Insurance Contributions.
  • We have agreed with the Comptroller and Auditor General of the National Audit Office that we will keep him fully informed as this review progresses, and facilitate any audit or assurance work he may require.
  • Separately, as HMRC’s approach to taxation in the media has evolved over time, the BBC will invite broadcasters to consider together an industry-wide approach.

Tax status in the media industry is a complex area, where’s there’s long been a lack of clear guidance or case law specific to the industry. HMRC guidance has changed over time and we’ve adapted our approach in line with that.

We’ve always tried to balance our responsibilities to presenters with our responsibility to spend the licence fee appropriately. Our responsibility for the stewardship of public money means that we cannot assume the tax liability of others in the absence of a compelling justification for doing so.

However, following concerns raised about the use of PSCs for BBC engagements dating from the late nineties, the BBC believes it is appropriate to look again at these issues.

When individuals are contracted as freelancers through personal service companies they have been responsible for their own tax affairs. Many will also work for a number of different organisations outside the BBC. Contracting via PSCs has also protected the licence fee because until last year it was the responsibility of PSCs to ensure they paid the correct tax and National Insurance.

But we are announcing action today because we have recently been challenged as to whether there are any circumstances in which it is appropriate for financial liability arising from any misclassification of tax and National Insurance Contributions in PSCs to be the responsibility of the BBC, irrespective of the legal position.

It is intended that the independent process under the supervision of the CEDR will allow some on-air presenters now facing historic demands for tax and NI to test the circumstances of their engagements via a PSC.

A consultation, to be overseen by CEDR, will first consider the criteria which people should have to meet in order for their case to be considered.

Those who qualify for the process would then be able to ask for a review of the circumstances around their engagement via a PSC, including reviewing documents that are available from the time.

The process will assess whether it is appropriate or reasonable, given the responsibility to the licence fee payer, for the BBC to make any contribution towards historic demands for Employers National Insurance Contributions.

The BBC is aware that there is a very high hurdle where public money is concerned and the whole purpose of the work is to inform and advise, so we cannot prejudge the outcome. The process will only consider whether the BBC should contribute towards demands for Employers National Insurance Contributions, not demands for other taxes which individuals are liable for.

The BBC’s Charter makes clear our responsibility to use the licence fee appropriately, and the Comptroller and Auditor General is required to issue an opinion on the regularity of the management of the BBC’s resources. The BBC will therefore ensure the Comptroller and Auditor General is fully informed as this review progresses, and facilitate any audit or assurance work he may require to support his responsibility for reporting on regularity, along with other relevant responsibilities and rights under the Charter.

BBC Press Office

Notes to Editors

Employment status, contracting models and accounting for tax across the broadcasting industry is a complex area and HMRC’s approach has developed over time. As a public body, the BBC must balance the interests of those who work for it with those of the Government, HMRC and the licence fee payer. The BBC has always sought to act responsibly in the way that it engages its workforce, including on-air presenters, to take account of industry practice and circumstances of the engagement as well as the BBC’s responsibility to spend the licence fee appropriately.

In common with others across the media industry, over the last few decades, the BBC has had to continually review its approach to the evaluation of employment status for on-air presenters, across all genres and types of output, as case law and HMRC guidance has evolved. The model of engagement for individuals, and the use of PSCs, in these areas have also evolved over time.

The BBC looked at employment status and the application of the intermediaries rules (also referred to as the IR35 rules) in detail in 2012 when Deloitte undertook an independent review of the BBC’s Freelance Engagement Model. This report was based on a risk- based review of the BBC’s approach to talent contracting and is available in full at:

The Deloitte review looked at the way we engaged with on-air presenters and made recommendations for future contracting. The review found that the BBC’s policies were well developed and effective in achieving a high standard of tax compliance, particularly given the volume of activity and for an organisation of the size and complexity of the BBC. The review found no evidence to suggest that the BBC engaged with PSCs to avoid tax or NIC. The review made a number of recommendations, including the development of an employment status test with HMRC for on-air television engagements, which was used by the BBC until 2017. In line with Deloitte’s recommendations, a number of on-air news presenters who had previously been employed on a freelance basis via PSCs moved to on-air employment contracts. The employment status test did not apply to radio presenters as HMRC had already published specific guidelines for testing the employment status of radio presenters.

In 2017, the Government introduced new rules relating to the tax accountability for payments to intermediaries in the public sector. Alongside it, HMRC introduced new guidance (the Check Employment Status for Tax - the CEST) which continues to be revised and updated in relation to its application to the production and broadcast industry. These changes have led to a number of new questions and issues arising in relation to the assessment of tax status across the industry, as the new guidance indicates that a larger proportion of on-air presenters should be treated as employed for tax purposes than previously. Concurrently a number of on-air presenters, across the industry, are now facing investigations from HMRC about how tax and NI has been applied in the past to their engagements via a PSC.