007Steve

UPDATE:
Christa Ackroyd's £419k tax bill: how HMRC's crackdown will now hit thousands more in private sector
A couple of points seem to buzz in my tiny-mind......
Why is this being treated as tax avoidance and not tax evasion?
Why is the BBC not being investigated for criminal conspiracy, before, during, and after the fact?
When is somebody going to go to gaol?
And yes, I AM going to go on, and on, and on, and on about this, because if this was any average group of UK taxpayers they'd be wearing stripes & arrows by now...:

mikelincs

It's not just the BBC though it's rife throughout all big business, and the avoidance IS legal,, evasion isn't . Perhaps Mr Branson would like to comment about why his company Virgin Care, owns many millions of pounds worth of UK NHS contracts but pays NO TAX, perhaps ITV would like to prove their equal pay set up, or even SKY or perhaps any of the household name companies. You do seem to have a big problem with the BBC but they aren't the only ones doing the same thing.

chawkins99

It is (or was) standard practice in the IT consulting industry for an individual consultant to work through a Limited company. In fact, most clients required it so they could avoid the employer responsibilities like paid holidays, sick pay, contracts, etc.

The down-side for the contractor was no income if not working. Not allowed to claim unemployment because you were classed as self-employed. Plus, you could be terminated immediately, without notice, without cause and without pay.

The upside for the contractor was instead of taking a salary, you would pay yourself dividends which IIRC attracted 20% tax as opposed to 40% income tax plus 10% employee's NIC and 10% employer's NIC. 60% tax

In 2000, the government introduced IR35 legislation which basically changed the status of most contractors to 'employed by the client' but without any of the employee benefits. The upshot was no more dividends. 60% tax.

This is the legislation that caught out Christa Ackroyd and the number 1 reason I got out of contracting (and subsequently left the UK). It is perfectly legal but only in very specific circumstances and a whole industry built up around crafting contracts specifically to avoid (not evade) the IR35 legislation.

durham_lad

The Telegraph article you linked to is for subscribers only so I will quote from a similar article in The Guardian.

I share your outrage, but to answer your question on Avoidance versus Evasion, the ruling does not set legal case law. I think it is a very complicated issue and the bar for proving deliberate tax evasion, a criminal offence, is going to be much higher than proving that a situation that was thought to be a tax avoidance scheme is not legal. I would hope that this HMRC victory showing that these personal service contracts are not legal structures will mean that in future all such contracts entered into will be classed as evasion.

https://www.theguardian.com/politics...-bbc-presenter

007Steve

"The distinction between tax avoidance and tax evasion is the width of a prison cell wall"... Denis Healy.
I'd suggest that the 'masonry' consists of legislation that applies to everyone; - and, imo, it's about time a few criminal prosecutions were brought to repair the bricks, mikelincs. Make a few public examples and the 'normal & perfectly legal' state of affairs would soon change - (and by the way prosecution would include the accountants and finance facilitators involved.
As to Branson, ITV Sky and others. These are private companies who should be pursued - but here's the difference. When I was in the UK I had no choice if I wanted TV but to pay a so called Licence Fee so that the BBC could employ revolting creatures like Saville, Hall, Harris, & Lee-Travers to tell me how great they were. No choice. I can at least refuse to buy or deal with a private company. So yes I DO have a big problem with the BBC...

chawkins99

I originally read this on the BBC site: Ex-BBC Look North presenter Christa Ackroyd facing tax bill of £420k - BBC News

The Guardian article is much clearer on the facts. She was contracted exclusively to the BBC with restrictions on outside employment. Clearly employed in all but name.

In my case, I would often be contracted for short periods of a few weeks and sometimes have more than one contract simultaneously. Sometimes it could be several weeks between contracts. It just became too onerous to justify every contract to HMRC. The contract rates weren't sufficient to cover the periods of unemployment so I went back to being a regular employee.

When it was good, it was very, very good but when it was bad it was horrid!

chawkins99

The truth is the BBC did nothing wrong. They 'employed' her through a personal service company. She (more accurately, her company) was responsible for paying the correct taxes. Sounds like she got some bad financial advice.

Nutek

This.

007Steve

No, most respectfully to you chawkins, no. Let's be precise here.
According to the Guardian's Report
"The court documents showed that it was the BBC who suggested she should work using a personal service company." i.e. the BBC by its CONDUCT conspired in the arrangement - and I suspect willingly so, to avoid the cost of Employer's NI.
The individual is one issue - but the corporate conspiracy is a fact.

scrubbedexpat142

Please correct me if I am wrong but haven't the BBC evaded paying Employer's NI contributions?

007Steve

Bullseye Expatrick!
Evasion not avoidance = Imo, criminal conspiracy.

chawkins99

No. With respect. The BBC 'suggested' an entirely legal (and very common) arrangement. There is no conspiracy.

Yes. It may have suited the BBC but the issue is that Ms Ackroyd failed to pay her taxes appropriately. Ms. Ackroyd Ltd. signed the contract and agreed to its terms. Nobody forced her.

chawkins99

Again. No.

This is no different than if the BBC pay Pizza Hut to cater an event. They pay the organization. The organization is responsible for paying the employees and their taxes and National Insurance.

Ms. Ackroyd is an employee of her Personal Service Company. Not the BBC.

scrubbedexpat142

OK, so Ms Ackroyd's PSC has evaded Employer's NI contributions.

chawkins99

Now we're getting there. Not evasion as such but tried to avoid and got caught out. As I eluded to earlier, probably bad financial advice.

The approach is legal but you have to prove you are independent, have other commitments and don't act on instruction of the 'employer'. If you have colleagues doing the same (or similar) job as an employee, you can't claim to be otherwise. Her co-anchor, Harry Gratian is a BBC employee.

If you satisfy the criteria, it's entirely legal. Unfortunately, she didn't and must pay up.

From the BBC story: