IR35 – HMRC Wins (this time)
Presenter loses IR35 appeal
28 November 2019
A BBC presenter has failed to convince the Upper Tribunal that her work was outside the IR35 rules. Why does this ruling have a significant impact and what key aspect of the decision do contractor clients need to know about?
BBC. The BBC has been making plenty of headlines for the wrong reasons in recent years. First there was the row about the disparity between the amounts it pays its female presenters compared with its male employees. Then a series of cases were brought before the First-tier Tribunal (FTT) involving a number of presenters who operated through a personal service company. The basic premise of the cases was that HMRC asserted that each of the presenters was “within IR35 ” and should have been taxed as such.
Ackroyd. The first of these FTT cases concerned the status of Christa Ackroyd (A). The FTT sided with HMRC, and it was widely reported that the presenter was facing a tax demand for approximately £420,000. However, since that decision both Lorraine Kelly and Kaye Adams both successfully argued that the IR35 rules didn’t apply to their respective engagements.
Control. In Christa Ackroyd Media Limited v HMRC [2019] UKUT0326 (see Follow up ) the Upper Tribunal (UT) decided that the FTT had adopted the wrong approach when looking at A’s case. Unfortunately, the UT held that the correct decision was arrived at in spite of this. The main factor that influenced this was the considerable level of control that the BBC was able to exert over A. A’s argument that this control only applied to her output, but not her input was rejected.
Advising. The decision contrasted with the other two cases and serves as a reminder that each engagement, even those with the same end user, may have different statuses.
The ruling sets a binding precedent that IR35 will apply where the engager has a significant degree of control over the work. Advise clients to avoid fixed-term contracts, as it seems these will lead to deemed employment status.