BBC saved £10m yearly on NI payments by paying presenters through PSCs, MPs told
The BBC saved around £10 million a year on National Insurance payments alone by paying presenters through personal companies, MPs have been told.
Radio and TV presenters told a parliamentary committee they were told by the BBC they must set up personal service companies (PSCs) or lose work, but then found themselves targeted by an HM Revenue and Customs crackdown on the arrangement.
The House of Commons Culture Committee published a dossier of evidence detailing how stars were pursued for unpaid taxes running into five or six figures, with some saying they had suffered mental health problems and even considered suicide.
With around 100 presenters thought to be facing investigation and some reported to be considering legal action, the BBC has established an independent dispute resolution process which might lead to it paying a share of historic bills for employer's National Insurance.
But the Corporation declined an invitation to come to Parliament and give evidence to the Culture Committee at a hearing alongside four well-known presenters who spoke out about their treatment.
Financial journalist Paul Lewis, the presenter of Radio 4's Money Box, told the committee the PSC arrangement could have saved the BBC 30% of the cost of employing presenters, some of whom lost rights to sick pay, maternity leave and pensions.
Around £10 million was saved annually on employer's National Insurance contributions alone, he estimated.
The BBC could face claims for compensation running into tens of millions over loss of pension rights, the committee heard.
Mr Lewis - who himself refused to set up a PSC - told MPs that relatively low-paid presenters on local radio and Radios 3 and 4 were treated as "disposable" by the BBC.
"This isn't a story of well-paid presenters trading through companies to avoid tax," he said.
"This is the story of the BBC forcing hundreds of presenters to form companies and treat them as freelancers because that gave the BBC flexibility and protected licence fee payers."
Mr Lewis said a group of presenters was due in court next week, while hundreds more were "fearing the brown envelope" from HMRC.
Kirsty Lang, the presenter of Radio 4's Front Row, said she gave up a staff post when asked by the BBC to form a PSC, despite fears about losing rights to sick pay.
She said "all my worst fears came true" after her stepdaughter died and she found herself unable to get bereavement leave, and was then diagnosed with cancer and had to work through surgery, radiotherapy and chemotherapy treatment.
"I entered into this whole arrangement in good faith, I trusted the BBC, I was proud to be part of the BBC, and I feel like I have been hung out to dry," said Ms Lang.
"I feel betrayed, and I ask 'Where is the duty of care to me and my colleagues'?"
DJ Liz Kershaw said she spent six months presenting her 6 Music show without payment after ceasing a PSC arrangement.
She said she was warned by her accountant that PSC status was doubtful, and it had offered no advantage to her. She suggested the BBC may have lied by informing her and other presenters that HMRC backed the arrangement.
"I think it's a tragedy that this mismanagement will lead to millions of pounds possibly being taken out of the coffers to rightfully compensate people who have been taken out of the pension scheme or gone through hell to the point where they have nearly taken their own life," Ms Kershaw told the committee.
She blamed the situation on a secretive and "oligarchical" management style under former director general Mark Thompson.
She read out a series of emails and letters in which she was told that she must take on PSC status.
Mr Lewis told the committee: "The BBC's point of view is that no-one was forced, but the evidence is that if you didn't do it, you didn't work."
And he added: "At the same time the BBC makes savings through PSCs, there haven't been that many savings at the management level.
"There are a lot of very, very well-paid people in management and we don't think all of them are doing a very good job."
The BBC announced on Monday that the Centre for Effective Dispute Resolution (CEDR) will conduct an independent process under which presenters will be able to ask for a review of their cases.
The Corporation said in a statement that it had "always tried to balance our responsibilities to presenters with our responsibility to spend the licence fee appropriately".
But committee chairman Damian Collins told the presenters: "I think a lot of people will be quite shocked by what you have said, and feel this is well below the standards we expect of the BBC."