The ongoing battle between HMRC and TV presenters: Another BBC presenter loses their IR35 appeal
HMRC has once again won against a BBC presenter in their crack down on the IR35 rules.
Many will remember the media frenzy earlier this year surrounding Lorraine Kelly’s tax appeal against HMRC. HMRC had brought a case against Lorraine Kelly for £1.2 million, claiming that her contract with ITV amounted to her being an employee. HMRC argued that although Lorraine is “more than just a newsreader and had a high degree of autonomy”, she “retained the contractual right of control, consistent with employment.” Lorraine successfully argued against this, and persuaded the court that when contracting Lorraine, ITV were engaging her brand and that she was providing a contract for services not an employee contract.
However, employers and freelancers should not be reassured that Lorraine’s victory means their contracts would be viewed in the same way. Earlier this month, HRMC was successful in its case against the three BBC presenters, David Eaves, Tim Wilcox and Joanna Gosling. The judges ruled that there was “sufficient mutuality and at least a sufficient framework of control to place the assumed relationships between the BBC and the presenters in the employment field.”
In most recent news, BBC presenter Christa Ackroyd will not have been as pleased at the outcome of her case as Lorraine Kelly was. On 25 October, the court dismissed Christa’s appeal to overturn the decision that she was liable for £420,000 in outstanding tax. The court found that Christa’s relationship with the BBC was one of an employer-employee relationship as the BBC could control what work she did and it was effectively a full time job.
It may provide comfort to contractors that the three BBC presenters were not taxed as harshly as they would have otherwise been had they not sought proper advice on their taxes. This meant the court was reassured they had “not been careless” with their tax affairs and had acted in good faith. This is a clear reminder to companies hiring contractors to take advice on the tax regime.
What can be gleaned from these differing decisions is that whether someone will be a self-employed contractor or an employee really can only be determined on a case by case basis, and this will sometimes require a detailed look at the level of control the employer has over the individual.
The cases have again flagged concern over the accuracy of HMRC’s CEST tool as the extension of the new rules to the private sector in April 2020 quickly approaches. Whilst the tool will provide a good starting point, employers and contractors will need to gain expert advice regarding their contracts before April 2020 to ensure they are not hit with a hefty bill from HMRC further down the line.
IR35 rules are changing in April 2020 with the result that businesses engaging contractors may also face tax penalties as well as the contractor. It is therefore important that the relationship between the business and the contractor is properly documented and understood.
At Ison Harrison our team of expert commercial solicitors can advise on these issues and assist in drafting and negotiating the contractual provisions required to protect your business. If you are a business who engages contractors or are yourself a contractor, it is important that you take advice.
Call 0113 284 5000 or alternatively email Richard.Coulthard@isonharrison.co.uk.