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BBC contractors doing nothing wrong, tax expert says

While everyone seems to have their knickers in a twist over BBC contractors using personal service companies, one expert says there’s noting wrong with doing so.

The use of personal service companies as a route to reserving a bit more of a BBC employee’s paycheque from the taxman may have everyone up in arms, but The Association of Chartered Certified Accountants’ head of taxation, Chas Roy-Chowdhury, says there’s nothing amiss with such behaviour. In fact, the tax expert says these individuals could actually be paying more tax through the use of a personal service company than they would otherwise.

Mr Roy-Chowdhury says that there are all to many myths and rumors flying about regarding the function of personal service companies when it comes to taxation. It turns out that employees funneling their pay through a PSC are actually saving their employer money more than they are saving themselves extra cash, as an employer need not make contributions to national insurance for employees using PSCs, the tax expert added..

Much of the time, there is little difference between what Her Majesty’s Revenue & Customs takes from a PSC in the form of tax revenue than what would be collected from PAYE, according to Mr Roy-Chowdhury, who wrote a recent blog on the subject on, interestingly enough, a BBC website. In many instances, he added, you may end up paying more in tax than you would otherwise.

The revelation comes on the heels of last week’s statement from Margaret Hodge, Commons spending watchdog, who announced that there could be as many as 25,000 BBC contractors that may not be paying their fair share of taxes.

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