Yesterday, HMRC won its case against former BBC Look North presenter Christa Ackroyd – who now must pay over £400,000 in unpaid income tax and national insurance.
Ms Ackroyd presented the news programme for 12 years. During this time, she was engaged as an independent contractor and paid through a personal service company. HMRC’s position was that from 2006 to 2013 Ms Ackroyd was in fact not in business on her own account (as her contract would suggest) and was more akin to an employee of the BBC. The tax tribunal agreed that IR35 legislation was engaged.
It has been reported this morning that up to 100 past and present BBC contractors could be ‘on the hook’ as a result of this ruling. Press coverage of the case has suggested that well-known BBC stars such as Fiona Bruce and Jeremy Paxman have also used personal service companies in the past to be paid for their work with the BBC.
The tribunal was very clear that they made no criticism of Ms Ackroyd – they said: "she took professional advice in relation to the contractual arrangements with the BBC and she was encouraged by the BBC to contract through a personal service company."
Commenting on the investigation into the BBC’s use of personal service companies, HMRC said: "employment status is never a matter of choice; it is always dictated by the facts and when the wrong tax is being paid we put things right."
The ruling serves as a stark warning for anyone engaging independent contractors through personal service companies. This arrangement should only ever be used if it reflects the true reality of the relationship. From our perspective – Ms Ackroyd was clearly integrated into the business of the BBC as ‘the face’ of Look North. One of the key things to note in this case is that the relationship changed, and should have been managed accordingly. When Ms Ackroyd was first engaged by the BBC, she may have been more akin to an independent contractor who could take or leave assignments and had no expectation on work – but once she became an integral part of the Look North team, her contractual arrangements should have been updated.
The BBC themselves may now also be required to make payments to HMRC in respect of unpaid tax relating to Ms Ackroyd.
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