By Mark Sweney
Ruling at Royal Courts of Justice for former Look North host Christa Ackroyd could have impact on more BBC presenters
A number of BBC presenters could be facing bills for thousands of pounds in backdated tax after HMRC won a key tribunal ruling against Christa Ackroyd, the former presenter of the corporation’s regional Look North programme.
Ackroyd worked at the BBC on what is known as a personal service company contract, meaning she was self-employed and using a limited company instead of being employed directly on the corporation’s payroll. Using a company meant much lower tax payments needed to be paid.
She was fired by the BBC in 2013 over an alleged contract breach after HMRC demanded unpaid taxes because it said she was, in reality, an employee of the BBC and not allowed the tax breaks.
ckroyd has now lost an appeal against HMRC – which is demanding from her £419,151 in income tax and National Insurance contributions – following a ruling handed down at the first-tier tax tribunal at the Royal Courts of Justice.
“Employment status is never a matter of choice,” said a spokesman for HMRC. “It is always dictated by the facts and when the wrong tax is being paid we put things right.”
The court documents showed that it was the BBC who suggested she should work using a personal service company. Other BBC stars have previously worked using personal service contracts. The presenter Jeremy Paxman said the corporation had required him to set one up.
The tribunal’s 44-page ruling showed that in 2009, 98% of the £206,000 earned by Ackroyd came from the BBC. In 2010, the corporation accounted for 96.5%. Ackroyd had to work a minimum of 225 days a year for Look North or see her fees lessen. Her co-presenter on Look North, Harry Gration, was a BBC employee.
The BBC also paid Ackroyd a £3,000 annual clothing allowance, and her contract restricted her from working for other organisations without BBC permission. The BBC wanted her to stop writing a column for the Sunday Express and a payment of more than £40,000 was made that “appears to have been linked” to her giving it up.
Ackroyd also received “success payments” of up to £15,000 a year if the TV ratings of Look North were “consistently and significantly in excess” of those of rival ITV’s news programme Calendar.
While the tribunal ruling does not set legal case law this marks the first time, in seven years, that the HMRC has won a case relating to IR35 rules, which govern the tax paid by those who work for clients through an intermediary.
“This has been a long running issue for television presenters working through personal service companies for the BBC, and for the BBC itself,” said Bill Longe, of audit, tax and consulting firm RSM. “Although this is not a lead case, this decision will nevertheless be seen as a setback for other appellants taking similar cases to the tribunal.”
HMRC is in the process of investigating about 100 current and former BBC presenters, and stars from other broadcasters, over claims of tax avoidance. The inquiries focus on allegations that the presenters falsely declared themselves self-employed to minimise their tax and national insurance bills.
In 2012 a report from Deloitte found that the BBC had offered presenters the option of signing staff contracts or using personal service companies, but had not advocated one over the other. The report found the corporation paid more than 124 stars in excess of £150,000 a year via personal service companies.
Ackroyd told the tribunal she was “victimised by the BBC and made a scapegoat” following the internal inquiry about the use of freelancers.
The BBC subsequently changed its practices after it was criticised by the influential public accounts committee for allowing about 1,500 presenters, including stars such as Fiona Bruce and Paxman, to be paid through service companies.
The BBC has previously said that the issue touches upon the whole broadcasting industry, saying that the practice of paying presenters through personal service companies has been a standard practice.
The BBC had not responded to a request for comment at the time of publication.