– A Treasury spokeswoman
The Government acted quickly earlier this year to tighten the rules on off-payroll appointments in central government departments. The BBC is wholly independent and local government pay is not controlled by central government.
However the Government has raised this issue with both the BBC and the LGA and we look forward to seeing the results of the BBC's own review, which is now under way.
– BBC statement
We note the conclusions of the PAC report and will respond to the points raised as part of our detailed review of tax arrangements.
The BBC pointed out that this relates to 25,000 contracts and not 25,000 people, and that in many cases an individual - such as an occasional contributor to programmes - could be issued with a contract each time he or she is booked to appear.
- Under new rules, announced in May, all senior public sector staff must be on the payroll unless there are exceptional temporary circumstances.
- Departments must also seek formal assurance from contractors that they are paying full income tax and national insurance.
- But the PAC said it was not clear how the new rules would be implemented.
The BBC have told the PAC inquiry that its off-payroll staff were "freelance workers" and that the arrangements were "a pretty standard model" in the media industry and "important to the economics of the BBC". It is conducting a detailed review of the practice.
But, in a report published today, the PAC stressed that the BBC could not provide "any assurance" that those employed on such contracts were paying the appropriate tax.
"Although the BBC told us it provides information on its off-payroll arrangements to HM Revenue & Customs, it has no means of ensuring that its freelancers are paying the right amount of tax," it said.
"The BBC told us that it would be carrying out a detailed review of its off-payroll arrangements.
"The BBC's review should specifically consider whether the contracts resemble typical employment contracts, their duration and the number of repeat contracts, and the salaries involved.
"The review should set out how it will gain assurance that its staff pay the right level of income tax and national insurance on their income."
– PAC chairwoman Margaret Hodge
The public sector must itself maintain the highest standards of propriety in its employment practices if it is to show leadership in the fight against tax avoidance.
It must avoid the practice of using off-payroll arrangements for staff who should be on the payroll - a practice which generates suspicions of complicity in tax avoidance and which fails to meet the standards expected of public officials.
Those whose income is derived from monies raised through taxation have a particular obligation to make sure that they do not use tax avoidance schemes.
PAC chairwoman Margaret Hodge, a Labour MP, warned that the use of off-payroll arrangements gave rise to "suspicions of complicity in tax avoidance".
The figures emerged as part of a PAC inquiry set up after controversy over Student Loans Company boss Ed Lester's employment through a personal service company without tax being deducted.
The Treasury disclosed in May, after conducting its own review of the practice in Whitehall, that more than 2,400 staff, each earning more than £58,200 a year, were being paid directly and without PAYE deductions.
But the PAC warned that the Treasury's review of off-payroll arrangements had been "limited" because it did not cover the wider public sector like local government, the NHS or the BBC.
- According to the committee, the BBC employs up to 25,000 people a year who do not pay tax at source.
- MPs say that this number includes 13,000 people who appear on television and radio - so-called on-air "talent" - and another 12,000 off-air staff.
- Some 3,000 are paid via private companies, potentially allowing them to limit their tax liabilities.
- But the BBC insist that the actual number of people employed on this basis was far fewer than 25,000.
- They said: "In many cases an individual - such as an occasional contributor to programmes - could be issued with a contract each time he or she is booked to appear."
MPs have raised concerns that the BBC employs up to 25,000 people a year who do not pay tax at source.
The cross-party Public Accounts Committee (PAC) said it was "shocked" to discover how many off-payroll contracts, under which individuals must make their own tax and national insurance payments, were provided by the BBC.