New IR35 Tribunal Case is lost by HMRC
Loose Women star, Kaye Adams, is the second star to have beaten HM Revenue & Customs (HMRC) in a dispute over the IR35 rules following the case of Lorraine Kelly.
The HMRC investigation into Adams’ limited company, Atholl House Productions, focused on her work at the BBC.
At a hearing in London in March, the Tribunal set about the task of determining whether the rules for off-payroll working should apply for the two tax years ending 05 April 2016 and 05 April 2017.
HMRC claimed that Adams was a BBC employee and not a freelancer and so should be taxed under the IR35 regime. Adam’s brought the appeal against a PAYE tax bill of £81,000 and another £43,000 for national insurance contributions during this period, which lasted between March 2015 and March 2017. During this time, she had presented The Kaye Adams Show on the BBC, but also worked for other broadcasters such as Sky and ITV.
During the hearing, the Tribunal referred to Hall v Lorimer which stressed the importance of conspiring the whole picture.
It said: “In order to determine whether a person carries on business on their own account, it is necessary to consider many different aspects of that person’s work activity.
“This is not a mechanical exercise of running through items on a checklist to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail…”
In doing so the Tribunal appears to have questioned the process by which HMRC came to it‘s decision on whether IR35 should apply and it‘s CEST tool, which is designed to act as a checklist for employers.
The Tribunal found that while the BBC did have some element of control, she was in business of her own account and that despite her commitment the BBC did not have ‘first call’ on her time and her role was distinctive from other BBC staff.
Evidence given by M. Paterson, who was editor in charge of the Kaye Adams Programme, stated that she was “very much a broadcaster in her own right, given that she works for others, she isn’t BBC’s Kaye Adams, she is a journalist who happens to work for us.”
Judge Tony Beare did however back the BBC in deeming her substitution clause in her 2016/2017 contracts as meaningless.
He said she “did not in any meaningful sense provide her own equipment”; she “ran no financial risk” and Mutuality of Obligation existed.
However, these three arguments put forward in favour of HMRC’s case, highlighted just how strongly in business on her account Adams was, according to the judge.
He said: “Those two tax years of assessment need to be considered in the round, in the context of Ms Adams’s professional career as a whole.
“This is because Ms Adams’s engagement with the BBC did not occur in isolation. Instead, it was just part of her overall professional career…as an independent provider of services.”
This decision, along with the previous defeats for HMRC, could play a key role in future tribunal cases for other contractors once the IR35 regulations are extended to the private sector next year.