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Jeremy Paxman
Jeremy Paxman said in March that he had been told by the BBC to set up a company to receive his payments for presenting Newsnight or stop working for the broadcaster. Photograph: Jeff Overs/BBC
Jeremy Paxman said in March that he had been told by the BBC to set up a company to receive his payments for presenting Newsnight or stop working for the broadcaster. Photograph: Jeff Overs/BBC

BBC attacked for delays in stars' tax switch

This article is more than 11 years old
Broadcaster says it must honour contracts as it is accused of insensitivity to public concerns

The BBC is facing a fresh attack for delaying the changes to how its highly remunerated on-air talent is paid following the row over tax avoidance.

The corporation came under fire earlier this year for paying staff, including Newsnight's Jeremy Paxman, through personal service companies, allowing some to avoid the standard rate of income tax.

In response, plans were outlined to move around 131 of the 804 presenters currently paid more than £50,000 a year on a freelance basis on to the staff payroll to avoid any future controversy. However, the under-fire corporation believes it cannot legally terminate current contracts and will only make the changes once they have expired.

In a letter to Labour MP David Winnick, a member of the home affairs select committee, who has been pursuing the issue, the acting director general, Tim Davie, attached an email sent to staff by his chief financial officer, Zarin Patel, explaining its plans to reform the way it pays stars.

The email added: "We will begin 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 contracts expire."

Winnick said he believed there was no excuse for the prevarication and the contracts should be immediately renegotiated: "No information is given as to when these contracts will end, so it does appear that this will continue for quite a considerable time.

"Almost certainly, in most cases, if not all, the 804 people would be considered to be employees of the BBC in the sense that they appear regularly all the year round presenting and appearing on programmes and I cannot understand how it can possibly be justified that … these people would pay a level of tax less than my constituents, whose average salary is just under £23,000.

"Now there is so much concern over the chaos around the DG and the huge amount of money given to others, I think BBC top management are being insensitive to public levels of concern."

There is no suggestion that any of the presenters has broken any tax rules in their dealings with the BBC. A review by the accountants Deloitte for the BBC also found no evidence that the corporation had tried to avoid income tax or national insurance contributions.

It did find, however, that the "policy for engaging on-air talent had been applied inconsistently, with some people being engaged as employees, some as self-employed freelances and some through PCSs [public service companies]", according to the email sent from Patel. The email added: "In some cases, some on-air talent appear to have the characteristics of 'staff' and might be expected to be engaged as employees."

The BBC has declined to discuss the individuals affected, but the Deloitte review makes clear they include some of the most famous and highly paid presenters on television and radio.

In March, Paxman brought the issue into the open after he revealed he had been told by the BBC to set up a company to receive his payments for presenting Newsnight or stop working for the broadcaster altogether. Reports have suggested that newsreaders Fiona Bruce, Joanne Gosling, Emily Maitlis, Gavin Esler, Sophie Raworth, as well as radio broadcaster Chris Evans, are paid this way.

MPs on the public accounts committee last month accused the BBC of having "staggeringly inappropriate" arrangements for many of its staff and said it could be "complicit" in tax avoidance.

People registered as personal service companies can also pay corporation tax of 21% on earnings. Individuals paid under the PAYE tax system incur income tax of up to 45%.

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