BBC presenter Christa Ackroyd has lost her appeal against an IR35 ruling from February 2018. The Upper Tribunal upheld the First Tier Tribunal’s (FTT) ruling that Ackroyd was subject to an ultimate right of control from the BBC and was, therefore, an employee.
The former Look North presenter’s case concerned the tax years 2006/07 to 2012/13, with HMRC contesting that she owed Income Tax and National Insurance Contributions (NICs) amounting to £419,151. Although the FTT’s reasoning was called into question, the end result was found to be accurate.
The case hinged almost exclusively on the element of ‘control’. Ackroyd’s representatives considered that, while the BBC may have controlled her ‘output’ it did not control her ‘input’, which they argued was the relevant factor in determining employment control. However, this argument was rejected by the tribunal, partly because this breakdown of ‘control’ hasn’t been adopted in previous tax tribunal cases.
The test of Supervision, Direction and Control (SDC) is quickly becoming the most relevant determinant when it comes to IR35 tribunals. This is largely because the individual circumstances and working practices of each case must be closely scrutinised in order to reach a conclusion on employment status. As case law evolves, it’s likely that concepts such as ‘control’ will be broken down in greater detail.
The case has been criticised by many as unfair, given that Christa Ackroyd was given no option by the BBC but to work via a limited company. Ackroyd drew an additional short straw as her case, like those of the other BBC presenters facing tribunals, was based on the pre-reformed Off-Payroll rules. This means that the worker is deemed liable for Employer’s National Insurance, which, under the reformed rules, would rightfully be paid by the BBC. Under the new reforms, it would also be the BBC who were pursued by HMRC for perceived tax avoidance.
Industry spokespeople for the contracting sector are pointing out that this is yet another example of how complex the determination of employment status is. Therefore, it’s unfair for the government to expect businesses to be held responsible for assessing the IR35 status of the contractors they engage from next April.
This has seen a recent spate of large businesses adopting a contingency policy not to use limited company contractors going forward. Their actions have seen a general move by contractors towards using umbrella companies as a safe interim option, as working via a PAYE umbrella eradicates the IR35 risk. For more information on the ‘domino effect’ of the ‘PAYE only’ policy, read our article here.
If you’ve been affected by the Off-Payroll reforms, or if you’re unsure about your employment status, ContractingWise has a range of options to help you keep your contracting career on track. To talk to a member of our team, call: 0203 642 8679