HMRC’s CEST tool blamed for BBC misclassifying workers HMRC’s CEST tool blamed for BBC misclassifying workers

HMRC’s CEST tool blamed for BBC misclassifying workers
21 Nov 2018

Hundreds of BBC presenters may be asked to repay tax to the UK authorities, following a report from the Government’s public spending watchdog.

The National Audit Office (NAO) found that 800 BBC presenters could potentially be asked to put their hands in their pockets, with some bills running into thousands of pounds. Her Majesty’s Revenue & Customs (HMRC) is currently investigating around 100 BBC freelance staff, the report added. 

The BBC hires thousands of freelancers, some of whom operate as personal service companies (PSC), which means they are self-employed rather than being on the BBC's payroll. 

Before April 2017, any freelancer working for the BBC as a PSC had to inform HMRC of their employment status for tax purposes, which ensured they would pay the correct amount of tax. But a subsequent change in the law has made public authorities, including the BBC, responsible for determining the employment status of any PSCs they use. 

As a result, the BBC started using a new HMRC tool, the Check Employment Status for Tax (CEST), to assess the employment status of its freelancers. While most on-air freelancers were previously classed as self-employed, the new tool categorised them as employed.

According to the NAO, the BBC has already taken steps to help the affected individuals. But it also said that issues relating to the broadcaster’s relationship with its freelancers remained “unresolved and may have financial implications for the corporation”. 

The report indicated that between April and September 2017, the BBC had paid £8.3 million (US$10.7 million) in tax to HMRC in advance to avoid any penalty charges. It has yet to fully recoup the money.

But the BBC has now approached HMRC to discuss ways to resolve the cases. "We recognise there are still issues to address and remain committed to resolving them,” a spokesperson said. “We are currently in discussions with our presenters and are actively engaged with HMRC to explore the options for resolution."

Dave Chaplin, chief executive, of ContractorCalculator, which has been campaigning about the CEST’s shortcomings for some time, said the NAO report had “unpicked the mess HMRC created at the BBC with the misguided off-payroll tax in the public sector”, but warned that it was “just the tip of the iceberg”. 

“We mustn’t forget about all the other public sector bodies that were strong-armed into using CEST, and who will face similar problems,” he claimed. “It’s time that Government held a public inquiry into HMRC’s IR35 team, their behaviour towards taxpayers, their questionable published guidance and their implementation of the off-payroll rules.”

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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Hundreds of BBC presenters may be asked to repay tax to the UK authorities, following a report from the Government’s public spending watchdog.

The National Audit Office (NAO) found that 800 BBC presenters could potentially be asked to put their hands in their pockets, with some bills running into thousands of pounds. Her Majesty’s Revenue & Customs (HMRC) is currently investigating around 100 BBC freelance staff, the report added. 

The BBC hires thousands of freelancers, some of whom operate as personal service companies (PSC), which means they are self-employed rather than being on the BBC's payroll. 

Before April 2017, any freelancer working for the BBC as a PSC had to inform HMRC of their employment status for tax purposes, which ensured they would pay the correct amount of tax. But a subsequent change in the law has made public authorities, including the BBC, responsible for determining the employment status of any PSCs they use. 

As a result, the BBC started using a new HMRC tool, the Check Employment Status for Tax (CEST), to assess the employment status of its freelancers. While most on-air freelancers were previously classed as self-employed, the new tool categorised them as employed.

According to the NAO, the BBC has already taken steps to help the affected individuals. But it also said that issues relating to the broadcaster’s relationship with its freelancers remained “unresolved and may have financial implications for the corporation”. 

The report indicated that between April and September 2017, the BBC had paid £8.3 million (US$10.7 million) in tax to HMRC in advance to avoid any penalty charges. It has yet to fully recoup the money.

But the BBC has now approached HMRC to discuss ways to resolve the cases. "We recognise there are still issues to address and remain committed to resolving them,” a spokesperson said. “We are currently in discussions with our presenters and are actively engaged with HMRC to explore the options for resolution."

Dave Chaplin, chief executive, of ContractorCalculator, which has been campaigning about the CEST’s shortcomings for some time, said the NAO report had “unpicked the mess HMRC created at the BBC with the misguided off-payroll tax in the public sector”, but warned that it was “just the tip of the iceberg”. 

“We mustn’t forget about all the other public sector bodies that were strong-armed into using CEST, and who will face similar problems,” he claimed. “It’s time that Government held a public inquiry into HMRC’s IR35 team, their behaviour towards taxpayers, their questionable published guidance and their implementation of the off-payroll rules.”

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER ARTICLES THAT MAY INTEREST YOU

HMRC's employment status tool branded "hopelessly unreliable"

What will extending off-payroll tax rules to the UK private sector mean?

Proposals for UK gig workers to pay income tax would cause "confusion"

 

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