The BBC’s mishandling of personal service companies used by presenters has caused hardship and risked bringing the the corporation into disrepute, parliament’s spending watchdog has found.

A report by the public accounts committee said the BBC’s approach had damaged its reputation, been muddled and chaotic, and its communication with those affected had been unacceptably poor.

The broadcaster has faced controversy over its arrangements with freelancers for several years. Some have accused the BBC of forcing them to set up special tax vehicles to allow the corporation to avoid paying millions in national insurance contributions.

More than 800 TV and radio presenters could face tax investigations because of the BBC’s policy, the National Audit Office has previously disclosed.

Inquiries into the BBC’s pay systems have been held by the public accounts committee and by the digital, culture, media and sport (DCMS) committee. Kirsty Lang, co-presenter of Radio 4’s Front Row, and DJ Liz Kershaw were among the BBC figures who told the DCMS committee in March 2018 that they had been made to set up personal service companies (PSCs), depriving them of employment rights such as holiday and sick pay, and pension contributions.

Many presenters had since been pursued by HM Revenue and Customs (HMRC) for unpaid tax bills, some running into thousands of pounds, the report said.

Paul Lewis, the host of Radio 4’s Moneybox, also gave evidence to the digital, culture, media and sport committee last year. Following the new findings by the public accounts committee, he told the Guardian: “The BBC tried [to get him to use a PSC] but I refused and eventually it was accepted that I was a freelance by both BBC and HMRC and I was engaged and paid as such – and still am incidentally.” [See footnote]

Meg Hillier, the chair of the committee, said the BBC’s failure to properly manage its use of personal service companies (PSCs) had a devastating effect on individuals and revealed significant weaknesses in the corporation’s processes.

“The lack of clear accountability at senior level for the BBC’s policy on PSCs, and the BBC’s poor communication with freelancers about the implications of that policy, are particularly troubling.

“Apologising is not enough. The BBC has committed to helping those affected. We expect to see evidence both that it has done so and that it is taking meaningful action to prevent such distressing problems arising in future,” she said.

In April 2017, the government introduced changes forcing public bodies to become responsible for determining the employment status for tax purposes of everyone it hired through personal service companies. Assessing such a status was complicated because there was no precise statutory test of what constitutes an employment relationship, auditors said.

The BBC has apologised to people affected by its policy changes and approach to implementing government reforms, and is trying to reach a settlement with HMRC for outstanding tax claims, but this is taking longer than expected.

The Rev Richard Coles, the former Strictly Come Dancing star who co-hosts the BBC Radio 4 show Saturday Live, said that “forming PSCs was forced upon us by the BBC, which must take responsibility for that”.

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Writing in the Guardian last March, he said that he and his fellow BBC stars were not “lavishly paid luvvies moaning about having to pay tax” and he called on the broadcaster to be fair.

A BBC spokeswoman said it had introduced a much simpler set of contracting arrangements to give more clarity and certainty. “We welcome the committee highlighting that the wider public sector has also struggled with this test,” she said, “having been given considerably less time to implement than the private sector. Assessing an individual’s employment status is often complex, as the report also acknowledges.

“We fully understand and regret the stress this has caused presenters. We are supporting them and we recently set out how we will calculate our contribution to any historic outstanding amounts sought by HMRC to help resolve the matter as soon as possible.”

• This article was amended on 8 April 2019. An earlier version wrongly listed Paul Lewis of Moneybox among BBC figures who told a parliamentary committee they had been forced to set up personal service companies. This has been corrected.

