HMRC vs BBC in IR35 case…ouch ! (this is about contractors with companies)
HMRC has defeated Christa Ackroyd, a BBC presenter in the first IR35 ruling since 2011. The tribunal ruled the TV personality’s contract was caught by IR35 and landed her company with a £420,000 bill!
This judgment is the first of a number of IR35 appeals involving television presenters who operated through personal service companies, following the mass IR35 clampdown in October 2016, with further rulings likely to arrive later this year.
HMRC argued that she was engaged under a contract of service rather than a contract for services, THEREFORE SHE SHOULD BE TREATED AS AN EMPLOYEE OF THE BBC. The IR35 rules were that her company was required to pay the appropriate amount of tax and NICs based on here deemed employment.
The tribunal sided with HMRC, deciding that Ackroyd could not fairly be described as being in business on her own account. The ruling stated that she was “economically dependent on the hypothetical contract with the BBC”, which took up most if not all of her working time.
According the ruling, the existence of a seven-year contract meant that Ackroyd’s work at the BBC was pursuant to a highly stable, regular and continuous arrangement. “It involved a high degree of continuity rather than a succession of short-term engagements,” stated the case notes. “That is a pointer towards an employment contract.”
Indicators of employment
The key factors around Ackroyd’s employment status were:
– Ackroyd accepted that the BBC ultimately had the right to specify what services her company would provide
– The court determined that, through the editor, the BBC would have control over content, given its editorial responsibility
– Ackroyd’s contract restricted her from providing services to other organisations in the UK without the consent of the BBC
– Ackroyd was contractually obliged to perform the services, and the BBC was contractually obliged to pay fees to her company on a monthly basis (regular basis)
Contractors can no longer afford to take a distant attitude to IR35 compliance as this case shows.