Taxation and freelance workers

There's much blather in the news at the moment about BBC workers who are being paid as freelancers rather than as employees. Some of these are high-paid talent with multiple sources of income including personal appearances, books, after dinner speaking, and so on.  Some are much lower paid, working from contract to contract. 

A lot of commentators say that these should all be paid with tax deducted at source and suggest that the BBC is somehow avoiding tax or encouraging tax avoidance. These include not only the press, but also legislators, who maybe ought to be better briefed. 

Let's look at some simple numbers:

If the rate for the job for a salaried employee is a salary £50,000 plus employer's pension contribution of say 10%, the cost to the employer including employer's National Insurance is £50,000 + roughly £5,900 NI + say £5,000 pension.

This excludes all other benefits and costs of employment; some of these will exist for on-site contract workers anyway (such as the cost of office space), and some won't, such as health care, certification, training, and some equipment and services.  That's a total outlay of £60,900.

To be able to pay the same salary, employer's NI and employer's pension contribution, a contractor will need to receive the same amount.  However, employers have long been recommended to insist that contractors work for a personal service company (PSC) or umbrella company to ensure that liability for unpaid Income Tax and NI doesn't fall back on the employer in case that a contractor goes missing. 

So the contractor also has costs of establishment, insurance and administration for a PSC, including employer's and public indemnity insurance, accounting and filing, payroll, and bank charges.  This may amount to a few percent of the total turnover, say £2,000 per annum.

So to have the same net income and pension contribution, a contractor needs to bill say £62,900, possibly with VAT to be added depending on registration limits.  In that case, the outlay to the employer is another £12,580, although some of this may be offset against VATable supplies.

And having received £62,900 plus VAT, it's then the PSC's responsibility to pay salary, Income Tax and employer's and employee's income tax - exactly the same amounts to Her Majesty's Revenue and Customs that the employer would gave paid. The VAT, if charged, also has to be paid - that's additional revenue for the taxman.

The problem in this picture is the contractor that finds a way to evade making the tax and NI payments that would be due. If there is evidence of this abuse, HMRC already has powers to clamp down and should just do it.

No-one's suggesting that all contract staff are tax evaders.  It's not necessary to take away the flexibility both for employers and for staff that prefer to work on contract by insisting that everyone must become a PAYE employee. 

RBS - stop rocking the boat

I love the BBC Radio 4 Today programme, and listen to it every weekday.  But this morning's (23rd February) episode had me shouting at the radio.  Michael Fallon, MP, member of the Treasury Select Committee, and James Barty, of the Policy Exchange, were interviewed by Evan Davis following the Royal Bank of Scotland results announcement - a £700 million loss in 2011 compared with about half of that in 2010.  In the context, that's not actually too bad a set of results.

Evan Davis asked Michael Fallon questions with the drift that we need to change track - sell, hold, or do something else:
(a) the Government should dispose of its RBS shares now and 'cut its losses'
(b) "why do we need to get our money back, we know we've lost the money"
(c) if not then clearly investing in banks is good, and we should buy a couple more
(d) if share price is going to go up why don't we buy more shares
(e) or maybe we should break RBS up into smaller businesses or mutualise

James Barty thought it would be a good idea to give away the shares but with a clawback for the Government when selling.  This would remove the Government overhang of 83% of the shares, and reduce political interference in the bank's management, but it's never been tried in this country.  [Given the known track record of public sector information systems, it could even be a struggle to identify eligible reciipients in a reliable way].

Here's a link to BBC iPlayer - the segment starts at 07:52 (1hr 52mins 15sec into the recording). 

Harm is already being done to the financial sector in this country, with the media fanning the flames of an anti-business culture. The Government is damaging the valuations of banks by imposing stricter banking regulations far faster than competing countries.

The drift of the interview was disappointing, and the questions badly thought out.   It's really unhelpful to the aim of recouping the full public stake in RBS, for the BBC to probe for ways to destroy the value of assets that we're seeking to sell. Stephen Hester has charted a course - stop rocking the boat.

BBC2 - The Spice Trail

I'm fascinated by the subject matter, but the presentation was so bad that I had to switch off after 25 minutes. The simpering gushing blather of Kate Humble made this unwatchable.  The travelogue was fine, the content fascinating, the pictures wonderful, and Kate H is great when she's doing voiceover.  But when she gets into the act, projecting herself to the forefront of events, it's stomach churning.

It's not Blue Peter, it's not CBeebies, it's a programme for allegedly intelligent viewers on the BBC's alternative prime channel.  From treading the pepper, to cheering the snake boats, to drinking tea made with Ayurvedic medicines, it's quite nauseating.  I nearly switched off after 15 minutes, and after 25, couldn't stand it any more.  What a shame that the BBC has made an infantile mess of a fascinating subject, instead of treating its viewers like adults.  Maybe episodes 2 and 3 will be better, but I don't hold out much hope.  I'm sorry but this gets my "BBC at its worst" vote.

While available on BBC iPlayer, it's here

BBC: George VI: The Reluctant King

As the Academy Awards approach, and The King's Speech is thought likely to do quite well, the BBC broadcast a very timely re-showing of the 1999 documentary George VI: The Reluctant King.    It was amazing, inspiring stuff and a great story.  The story was supported by a tremendous array of contributors (some no longer with us), many of whom participated in the actual events.  Only one key witness was missing, and I hope that she didn't find the interpretation of her father's story too inaccurate or distressing.

For me: I thoroughly enjoyed it, BBC at its best.  Sadly it doesn't appear to be available on BBC iPlayer, but it's worth keeping an eye open for another showing.

University funding - BBC coverage

What really bugs me about the last few weeks' coverage of the student fees issue on the BBC has been its concentration on the Liberal Democrats' agonies: which way to vote, whether Dr Cable would vote for the policy he himself was introducing, would the Parliamentary party split two, three or four ways?  Questions over Nick Clegg's personal credibility and ability to hold the party together are all very well, but compromises are the stuff of coalition.  Does it make any sense to roast the LibDems for a pre-election promise that clearly didn't convince enough of the electorate to put them into overall control?  No.

The much bigger issue that's been obscured by the soap opera focus on the LibDems is the change in university funding.  Though there's been no White Paper, precious little news coverage and not much debate or comment in the press, a huge shift is taking place in the central Government funding of higher education, reducing the annual budget from £7.1 billion to £4.2 billion in 2014-15.  With the ring-fencing of funding for the teaching of science, technology, engineering and maths subjects, other subjects will have little or no public funding.

Very quickly, we could end up with 'universities' that are nothing of the sort, with very little teaching of non-technical subjects.  Change of this scale should be debated properly before being enacted.  The BBC could and should make a better contribution to the understanding of this issue.

BBC - The History of British Music pt 1

I missed this four part series on its previous showings, but it's started magnificently, with the first truly great British composer, Henry Purcell. It's the BBC at its phenomenal best. Conductor Charles Hazlewood takes us through the music, palaces, and even pubs, with some brilliant performances.  The programme started with familiar works, but then Sir John Tomlinson sang a piece I'd never heard "They that go down to the sea in ships" and later "Cold Genius" from King Arthur.  He was superb, as was Elin Manahan Thomas, who performed Dido's Lament, and later "Fairest Isle", also from King Arthur.  And thank you to the Band of the Grenadier Guards, for their dramatic performance of the Funeral Music for Queen Mary (and for Purcell himself).

This wonderful programme was first shown on BBC4 on Saturday 9th May 2009, most recently on 26th June at 03:00 and now is only available on BBC iPlayer until 20:59 pm Friday 2nd July 2010. Link here. Catch it if you can!

Absolute joy - a week's holiday

I thoroughly enjoyed my week's holiday, though it was busy from finishing work on Friday night until going back ten days later. Two trips (one overnight) to my late father's house to continue with the preparations to put it on the market and to meet an estate agent, three full length Rugby matches refereed, together with about two dozen 7s matches over four days at the National Schools Sevens, nine items sold on Ebay, a curry evening with Ruth's colleagues from the maths department, a pretty exciting Grand Prix and a trip to Broadcasting House to watch the recording of The Now Show for BBC Radio 4.

Almost all of these were an absolute joy. Even the house clearing effort progressed well, and apart from poor weather and lots of mud on the Thursday, the Sevens were great; talent, speed, skills and some really close,exciting games, and the chance to referee some fantastic teams.

The event in the Radio Theatre at Broadcasting House was fascinating too, not least for the contrasts with a TV recording. Last autumn, we saw BBC2's Mock The Week at Television Centre. The studio was completely rammed with lights and cameras - over 100 gantries above our heads, and I may have counted ten cameras used during the show, each with its own cameraman. We were in our seats for a full three hours to produce a sub 30 minute programme, plus a few segments for the Christmas show. This was in the end exhausting and I'm sure that the cast struggled to raise many laughs after the two hour mark.

The Now Show seemed much lighter on its feet, though maybe more of it was scripted. Just a microphone each (one set lower for John Holmes), and we were out within 90 minutes - less than an hour's recording, and could easily have taken more.

The Radio Theatre is worth a closer look. Art deco, with bas relief sculptures round the sides at floor level - the floor has clearly been raised by some six feet. Wikipedia says that the sculptures are by Gilbert Bayes, though much else around the building is by Eric Gill. Sadly there is no mention, let alone photographs, of this work in the National Archives article, which however does show his work at Lords Cricket Ground, amongst others.