The question of BBC pay, and more generally the role of personal service companies remains a controversial topic. After the widely reported IR35 case involving BBC presenter Christa Ackroyd, attention moved to the House of Commons where a number of BBC presenters gave evidence before the Digital Culture Media and Sport select committee.
Sometimes witnesses get a hostile reaction from committees (who could forget Margaret Hodge tearing into senior HMRC officials?) but there is no doubt that this time the sympathies of the committee were very much with the presenters, who they clearly saw as blameless victims caught between the twin bureaucratic monoliths of the BBC and HMRC.
The picture of confusion which emerged was clearly worrying. Presenters talked about having no idea how much tax they had to pay and of their accountants being unable to complete tax returns for them because of a lack of information about what PAYE had actually been deducted. Perhaps not surprisingly the presenters struggled to understand the nuances of IR35 and the implications of the public sector reforms, which meant that the BBC had to operate PAYE and NIC without the individuals actually being employees.
Standing back from all of this it certainly seems very odd that the end result of working through a service company in the public sector is that you can have no employment rights but at the same time are taxed under PAYE. The more you look at the whole picture the messier it looks. This is one of those cases where the only real solution is to tear up the existing rule book and start again: though I don’t think that there is much hope of that happening any time soon!
The one thing that was lacking in the evidence given by the presenters was hard figures. That is important because without figures it is impossible to know exactly how the individuals were affected. What we don’t know is how the ‘pay’ rates were set. If the BBC passed on the whole of its NIC savings to the individuals by paying more than it would have done had the individuals been employees then potentially those individuals could have been better off even if IR35 applied and would certainly have been better off if it didn’t apply. But we will never know that because the contractual arrangements are not in the public domain.
I am assuming that at some point the BBC, and perhaps HMRC, will be forced by the committee to give evidence and perhaps then a fuller picture might emerge. By not appearing before the committee the BBC allowed the presenters to put their case almost unchallenged.
The narrative which emerged at the hearing was certainly compelling and there is no doubt that the presenters rightly felt confused and bewildered by the whole experience. But we need to see the whole picture in the round before we can draw any final conclusions. The whole question of service companies and employment status is critically important. Any report by the committee is bound to be influential and might lead to policy reforms. Reform is needed, but it must be based on a strong evidence base.