Christa Ackroyd, 60, has to pay back £419,151 after HMRC clamped down on a tax loophole used by freelancers
A former BBC presenter has been ordered to pay Inland Revenue £419,151 in unpaid taxes after HMRC won a landmark battle expected to clamp down on freelancers.
Christa Ackroyd, 60, who presented ‘Look North’ until 2013, now has to cough up thousands in income tax and National Insurance after she set up a limited company where her wages were paid into.
It is the first of around 100 cases regarding TV presenters, who could follow Ackroyd in facing large bills for back tax after claiming to be self-employed.
In effect, Ackroyd was selling her talent via Christa Ackroyd Media (CAM) Ltd from 2001 until she was sacked in 2013, when HMRC started to question her tax affairs in an IR35 clampdown.
Ackroyd had been on a salary of £163,233 – making her the highest paid BBC regional presenter and earning more than the Prime Minister.
She told investigators the decision to operate via a limited company was down to the BBC, and after checking the terms of arrangement with her accountant, she was given the green light.
Self-employed people work through their own limited companies, which allows them to pay a lower rate of tax. An individual earning £50,000-a-year through a limited company can pay just £2,000, compared to £13,000 of someone in employment.
An HMRC judgement stated: ‘Ackroyd has a genuine belief that towards the end of the contract between CAM Ltd and the BBC she was victimised by the BBC and made a scapegoat following an internal inquiry into the BBC’s use of “freelancers”.
Ackroyd had been on a salary of £163,233 – making her the highest paid BBC regional presenter and earning more than the Prime Minister. She set up a limited company which she was paid into, meaning the money she was paid was taxed significantly less than if she was employed
‘She clearly now has a deep mistrust of the BBC and of HMRC, the latter based in part on HMRC’s reliance on material provided by the BBC for the purposes of their enquiry into her tax affairs.
‘It is not appropriate for us in the course of this decision to make any findings as to whether Ms Ackroyd’s belief that she was being victimised by the BBC is justified or not. Indeed, we did not hear any evidence from any relevant BBC employees and we are not in a position to make such findings.’
Dave Chaplin, founder of ContractorCalculator, a portal for freelancers and contractors, told the i:’Looking at the details of this case, I have a lot of sympathy for Christa Ackroyd because the BBC encouraged her to work this way and her advisors were clearly out of their depth on IR35.’
HMRC got in touch with the BBC regarding Ms Ackroyd’s tax situation, and she was dumped ‘out of the blue’ in early BBC. Representatives from the BBC then refused to meet with Ms Ackroyd or her advisers, according to Ackroyd.
The judgement stated: ‘Ms Ackroyd was inevitably seen as a part of the BBC because she presented a nightly news and current affairs programme. However, an external observer would not know the details of the hypothetical contract. Ms Ackroyd had a BBC email address.’
A spokesman from the BBC said: ‘The BBC was not party to this case, and as was standard industry practice at the time the individual was engaged as a freelancer in 2001 and paid via their existing company. Until last year it was for individuals with service companies, rather than those engaging them, to determine their status for tax purposes.’