HMRC has defeated three BBC presenters in an IR35 tax tribunal ruling which is expected to have significant repercussions for the broadcasting industry.
Bar a couple of engagements, presenters David Eaves, Tim Wilcox and Joanna Gosling were all deemed within scope of IR35 during a series of contracts with the BBC. They have thus failed in their appeal against an accumulative tax bill of £300,000, although HMRC will not be able to recoup the full sum.
Though the two tribunal judges took opposing views over the IR35 status of the presenters, the cases were decided on the casting vote of Judge Harriet Morgan, who concluded that there was: “sufficient mutuality and at least a sufficient framework of control to place the assumed relationships between the BBC and the presenters in the employment field.”
However, HMRC was denied in its pursuit of tax demands for a number of the years in question, after the tribunal found that the presenters and their advisors had acted in good faith, contrary to the taxman’s claims. This was acknowledged in a statement released by the presenters:
“We are both pleased and relieved to say that the Tribunal has also found that we acted in good faith, dismissing HMRC’s claim that we – or our accountants – were careless about our tax affairs in any way. As a result, the Tribunal ruled that HMRC could not pursue its tax demands for a number of the years in question. We are delighted that our accountants were also deemed to have acted in good faith throughout. Given some of these findings, we are considering with our legal advisers whether to appeal.”
“We have endured eight years of HMRC investigation and eventual determinations to reach this point on what is clearly a difficult and unclear subject even for judges. It has been a depressing and stressful period for each of us. However, we are grateful that the judgement, in its entirety, shows we have acted in good faith throughout.”
As ContractorCalculator CEO Dave Chaplin highlights, HMRC’s failure to prove carelessness provides a valuable lesson for contractor clients: “One positive takeaway is that HMRC failed to discharge its burden of proof regarding carelessness, meaning it could only claim sums for arrangements going back four years, rather than six. This should issue a stern reminder to firms hiring contractors under the Off-Payroll regime – don’t ignore the detail.
IR35 specialist, Qdos, CEO, Seb Maley, commented: “It’s of real concern that at present, these individuals look like they will be made to pay vast sums to HMRC, despite the judges finding they were ‘forced’ into working as self-employed by The BBC. The onus should be on the engager to settle, not the presenters, who it’s very difficult to label as guilty.
“With around 100 other BBC presenters in the same boat, we could see similar verdicts in time. However, each case needs to be examined on its own merit. And if it’s decided The BBC left someone with no choice but to work outside IR35, then these individuals must be helped financially.
“Bear in mind that The BBC example is a rare one and isn’t reflective of a typical contractor engagement. Therefore, albeit worrying, genuinely self-employed contractors who have set or had their status set with care, do not need to panic.
“With further IR35 reform approaching, companies engaging contractors should take note. No firm should force individuals into a working arrangement purely for its own benefit. IR35 status must be assessed fairly. In doing so, situations like this will be avoided.”
