Updated 1730 16 July 2012:

On Monday 16 July 2012 (3.15pm) The national Public Accounts Committee will discussed ‘Off-payroll public sector pay arrangements.’ MPs quizzed top officials from the BBC, Treasury, HMRC and the Local Government Association about presenters and workers in the public sector who are not actually their employees.

Some tit-bits from today's evidence:

• Ms Zarin Patel the Chiefl Financial Officer of the BBC, responsible for tax matters, admitted that only 20,000 employees are on the payroll while 12,000 are freelance behind the scenes.  Add to this 13,000 freelancers in the 'talent' description - presenters, contributors etc and you see why the BBC could be the cause of a major loss of tax to HMRC.
• Of 467 BBC presenters (radio and TV) only some 320 are on the books.  148 are paid to their own personal limited companies. Ms Patel had to promise a review of these, and to report back to the Committee. These 148 will include top presenters we have all heard of.
• Of the Student Loans Company (my video link see below) we heard a remarkable tale of how Ed Lester escaped PAYE. Howard Orme gave the MPs the impression that his Dept for Business Innovation & Skills could not engage him off-payroll, but they wouldn't mind if the Student Loans Company did so.
• The feared IR35 legislation (which I doubt is being applied to many of the BBC presenters etc mentioned above) has resulted in just 23 investigations across the UK in 2010/11.

My blog from before the evidence...

How is the BBC paying people to avoid the usual PAYE (Pay-As-You-Earn) tax and National Insurance which teachers nurses and most civil servants pay? There are three main ways this happens, and all of them deliver tax or NIC savings to the BBC and the worker:

• Payment via the person’s limited company – a personal service company
• Payment as self-employed freelance workers
• Payment via large umbrella companies handling numerous workers

Why do the BBC and other public sector bodies do this?

• They will not have to pay Employer’s National Insurance because they are paying a company or a self-employed person.
• The worker can pay less tax.
• The organisation may have more flexibility about binning someone because they are not BBC employees. (Though the big hitters will have tightly-written contracts to protect them.)
• To disguise (reduce) the numbers of senior staff or well-paid staff, making the organisation seem more efficient. In fact the people are still there, just not as ‘employees’.

The background to this is the increasing awareness that a lot of people who earn their living working in public sector organisations are not paying the normal tax that employees should.

Danny Alexander MP the Financial Secretary to the Treasury has taken this issue on board and wants to find out how big the issue is. So far he has learned that 2,400 senior workers on over £58,000pa are not being paid under PAYE but via limited companies, making big savings. After hearing this, the Public Accounts Committee hearing was scheduled.

The BBC has been forced via Freedom of Information to admit that 36 of its workers/presenters earning over £100,000 were being paid via companies. Some of these will be household names – presenting some of the biggest shows in the country for the Beeb. 

Back in May 2012 I did a YouTube video about how Ed Lester, head of the Student Loans Company was not being paid via the payroll. View it at www.YouTube.com/HustonTV

Once the BBC gets its mauling by MPs today, we can expect Health bodies and other public sector organisations to face scrutiny over why some of their senior people are not senior employees.