HMRC loses IR35 appeal against ITV presenter Lorraine Kelly

TV presenter, Lorraine Kelly has won an appeal against HM Revenue and Customs (HMRC) at a First Tier Tribunal (FTT) over a £1.2 million demand for unpaid income tax (£899,912) and National Insurance Contributions (NICs) (£312,615).

The appeal arose from a challenge to her employment status under IR35.  HMRC were claiming that Lorraine Kelly should have been working inside IR35 at ITV Breakfast Ltd during the relevant period. This would have meant she was effectively an employee of ITV and income tax and NICs would have to be accounted for.

HMRC accepted that Kelly’s other assignments charged through her limited company were outside of IR35.

The claim, however, was appealed, on the basis that the nature and range of Kelly’s work meant all of her assignments should be treated as outside of IR35.

Within the case, Kelly argued that she did not receive sick pay or a pension, she chose her own hours and ultimately there was no guarantee her contracts would be renewed.

Additionally, although the ITV programmes were aired throughout the year, Kelly was only required to provide her services for 42 weeks per year and she was instrumental in helping find substitute presenters for the time she was absent.  ITV could however determine whether or not to accept the substitute.

Furthermore, ITV was under no obligation to pay Kelly if she was unable to present the show and any additional appearances on ITV would have separately negotiated contracts.

HMRC argued that ITV retained control over Kelly with regard to OFCOM obligations and that it was the editor of the programmes who exercised that control. However, the tribunal found that OFCOMs role as regulator was irrelevant and there was minimal control or supervision of Kelly by the editors.

After examining all of the evidence, the tribunal decided that the relationship between Kelly and ITV was a contract for services and not that of employer and employee, as such the case was found in her favour.

The second element contested at the FTT was whether or not Kelly was a ‘theatrical artist’; as if she were treated as an entertainer her limited company would be able to deduct her agent’s fees from it’s income.

HMRC disputed this description of her role, claiming she was a current affairs journalist.

Ms Kelly stated that she viewed the term “theatrical artist” widely and that she acted every day as a version of herself and was not reliant on ITV for her work.

However, as the judge found Kelly’s ITV contract was outside of IR35, the deduction of agent’s fees didn’t have to be resolved.

It is important to note that Lorraine Kelly’s case is the fourth of five IR35 cases to be lost by HMRC since 2018.

A spokesperson for HMRC said: “We are disappointed that the FTT has decided that the intermediary rules (also known as IR35) did not apply in this case. Moving forward, we will carefully consider the outcome of the tribunal before deciding whether to appeal.”