BBC Trust’s ‘freelancers on payroll’ remark not end for PSCs
11 October 2012
The chairman of the BBC Trust’s announcement yesterday that “some freelancers will be put on the payroll” and that he hopes “other public organisations will do the same”, does not mean that personal service companies (PSCs) are in inevitable decline.
Thu, 11 Oct 2012
The chairman of the BBC Trust’s announcement yesterday that “some freelancers will be put on the payroll” and that he hopes “other public organisations will do the same”, does not mean that personal service companies (PSCs) are in inevitable decline.
That is the view of contractor accountants following Lord Patten’s remarks to the Broadcasting Press Guild yesterday.
Following recent accusations by the Public Accounts Committee that the BBC was “complicit” in tax avoidance because it allows some workers to be paid as if they were companies rather than as individuals on the payroll, Patten said: “Some freelancers will be put on the payroll,” before adding, “I hope that other public sector organisations will do the same.”
Phillip Venn, director of contractor accountants Boox, tells Recruiter the effect will be “quite the opposite”.
Venn says that in future he expects to see more contractors decide on their tax arrangements on a contract-by-contract basis. While for some contracts contractors may be comfortable working on a freelance basis, for other contracts they may decide they are caught by IR35 (legislation to counter ‘disguised employment’) and opt to go on the payroll.
Patten’s remarks suggest a change in emphasis at the BBC. Earlier this week, the BBC told Recruiter: “In line with HMRC guidelines, certain freelancers are paid through service companies. It is the BBC's preferred option for freelancers paid more than £10,000 a year and in many cases it will be the only option available to them if they work at the BBC.
“It is in no way designed to reduce the tax they pay. We submit an annual report on all our freelance payments to the HMRC, who have the ultimate responsibility to ensure freelancers are paying the correct amount of tax on all their earnings.
“Nevertheless, the BBC has launched an independent review of all such arrangements. If we feel it is right to make any changes as a result of this.”
Speaking to Recruiter, Julian Ball, legal director of contractor accountants PayStream, says that the publicity around Patten’s remarks will have only limited effect.
He agrees that the ongoing publicity around the BBC has led people to question working and tax arrangements in the public sector, and that as a result “there will be some people going on to the payroll”. However, he says it is well to remember that a lot of people, for example in the creative industries, are genuinely self-employed.
Martin Hesketh, managing director of accountancy firm Brookson, tells Recruiter: “This yet again shows the importance of freelancers demonstrating that they are genuinely self-employed and paying the appropriate tax.”
A spokesperson for a public City-based institution who asked to remain anonymous adds: “The only reasons to recruit someone on a non-permanent basis would be because it is a very short-term assignment (eg. temporary secretarial cover) or for a project-based assignment where we are looking to recruit someone with niche/specialist skills for a set period of time.”
The chairman of the BBC Trust’s announcement yesterday that “some freelancers will be put on the payroll” and that he hopes “other public organisations will do the same”, does not mean that personal service companies (PSCs) are in inevitable decline.
That is the view of contractor accountants following Lord Patten’s remarks to the Broadcasting Press Guild yesterday.
Following recent accusations by the Public Accounts Committee that the BBC was “complicit” in tax avoidance because it allows some workers to be paid as if they were companies rather than as individuals on the payroll, Patten said: “Some freelancers will be put on the payroll,” before adding, “I hope that other public sector organisations will do the same.”
Phillip Venn, director of contractor accountants Boox, tells Recruiter the effect will be “quite the opposite”.
Venn says that in future he expects to see more contractors decide on their tax arrangements on a contract-by-contract basis. While for some contracts contractors may be comfortable working on a freelance basis, for other contracts they may decide they are caught by IR35 (legislation to counter ‘disguised employment’) and opt to go on the payroll.
Patten’s remarks suggest a change in emphasis at the BBC. Earlier this week, the BBC told Recruiter: “In line with HMRC guidelines, certain freelancers are paid through service companies. It is the BBC's preferred option for freelancers paid more than £10,000 a year and in many cases it will be the only option available to them if they work at the BBC.
“It is in no way designed to reduce the tax they pay. We submit an annual report on all our freelance payments to the HMRC, who have the ultimate responsibility to ensure freelancers are paying the correct amount of tax on all their earnings.
“Nevertheless, the BBC has launched an independent review of all such arrangements. If we feel it is right to make any changes as a result of this.”
Speaking to Recruiter, Julian Ball, legal director of contractor accountants PayStream, says that the publicity around Patten’s remarks will have only limited effect.
He agrees that the ongoing publicity around the BBC has led people to question working and tax arrangements in the public sector, and that as a result “there will be some people going on to the payroll”. However, he says it is well to remember that a lot of people, for example in the creative industries, are genuinely self-employed.
Martin Hesketh, managing director of accountancy firm Brookson, tells Recruiter: “This yet again shows the importance of freelancers demonstrating that they are genuinely self-employed and paying the appropriate tax.”
A spokesperson for a public City-based institution who asked to remain anonymous adds: “The only reasons to recruit someone on a non-permanent basis would be because it is a very short-term assignment (eg. temporary secretarial cover) or for a project-based assignment where we are looking to recruit someone with niche/specialist skills for a set period of time.”
