Yet another IR35 tribunal case involving a presenter has hit the headlines this week, closely following on from Lorraine Kelly‘s recent victory over HMRC, appealing against a tax bill of £1.2m for engagements with ITV between 2012 and 2017. This latest case continues a poor run of form for HMRC, who were again defeated in seeking to impose substantial tax bills on a presenter working for a national media outlet.
IR35 is tax legislation designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.
This most recent tribunal case, this time involving the BBC, the First-tier Tax tribunal held that IR35 did not apply to a presenter providing services to the BBC through a personal service company because a hypothetical contract between the presenter and the BBC (reflecting the actual contract between the BBC and the service company) would not have been one of employment.
Applying the previous case Autoclenz Ltd v Belcher  UKSC 41 (which, amongst other things, ruled that Tribunals can set aside express terms in a contract that do not reflect the actual day to day working relationship), the tribunal identified the actual legal obligations of the BBC and the service company, considering all relevant evidence (including the contractual terms, excluding only shams and wholly unrealistic possibilities, and the parties’ conduct).
The BBC had no first call on the presenter’s time or extensive control over her other engagements, despite these being contractual terms, as the parties were unaware of them. Similarly, the express right of substitution was impractical and so was discounted. This demonstrates the importance of written agreements matching practice.
Although concurrent engagements did not preclude employment status, the presenter’s “professional identity” and remuneration were linked more closely with her non-BBC engagements. The presenter’s long history of freelance work and serial engagements was “significant”, so previous engagements were relevant in determining current employment status.
The tribunal viewed the right of the BBC not to be brought into disrepute as neutral (being expected in any circumstances). It commented that modern working practices rendered home working unimportant but considered relevant the presenter’s lack of access to BBC systems at home to perform BBC work and noted the inapplicability of the BBC’s formal processes (such as annual reviews and entitlement to pursue internal vacancies).
The tribunal also placed weight on lack of holiday and sick pay, maternity leave and pensions, stating (contrary to recent case law) that a contract between a service company and a service recipient (both corporates) would not necessarily omit provision for these.
This decision reiterates the fact-specific nature of employment status, the danger of drawing parallels with superficially similar cases and the need to expert advice at an early stage.
IR35 Legal Advice
Lloyd Clarke is an IR35 specialist, having for many years advised personal service companies in assessing their IR35 status, putting in place mechanisms and safeguards to ensure they fall ‘outside’ IR35 and responding to HMRC enforcement action on behalf of his clients. Lloyd has also acted on behalf of national TV presenters in challenging IR35 decisions taken by HMRC.
If you have any questions regarding IR35 or employment status more generally, please do not hesitate to get in contact with Lloyd on 01206 239761.