Three BBC presenters have lost an IR35 case against HMRC after the High Court ruled that their relationship with the corporation was one of employment.
Presenters Joanna Gosling, David Eades and Tim Willcox were pursued by HMRC as part of a crackdown on the BBC’s use of personal service companies (PSCs). In a split court decision decided by a casting vote from Judge Harriet Morgan, it was decided that sufficient levels of MOO and control existed for them to be deemed inside the scope of IR35. They now face a collective tax bill of around £300,000.
The verdict breaks the Treasury’s losing streak with recent IR35 tribunals in the broadcasting industry. These included the first-tier tribunal of Lorraine Kelly, followed by Loose Women’s Kaye Adams and Talksport’s Paul Hawksbee. Although control and mutuality of obligation were sticking points in all three cases, the extent to which they existed was the deciding factor.
While Lorraine Kelly, in particular, was viewed by Judge Jennifer Dean as an entertainer with an individual brand, the BBC presenters were seen to have less autonomy over how, when and where they worked, with long term contracts that gave them little ability to work for other clients. Presenter Christa Ackroyd also lost her appeal back in February 2018 based on similar distinctions.
Much like Adams’ and Hawksbee’s cases, the three BBC presenters were faced with a split decision by the two tribunal judges over their employment status. This highlights the somewhat arbitrary nature of the verdicts, as well as illustrating the considerable difficulties involved in making an employment status determination.
The sum payable is only a fraction of that sought by HMRC, who pursued the presenters for £920,000 in accumulative tax bills. However, the court ruled that HMRC could not claim for six years of tax bills, as the presenters and their accountants were found to have acted in good faith and were not deliberate or careless with regards to their tax affairs.
This decision was influenced by confirmation that the BBC had insisted that presenters use PSCs without adequately informing them of the risks and liabilities involved. The BBC is now under pressure to pick up £200,000 of the tax bill that’s attributable to employer’s NI contributions.
The BBC has acknowledged that they introduced a policy of engaging certain freelance presenters through PSCs where they were understood to be self-employed. A BBC spokesman said: “We want to help presenters resolve any historic tax issues they face because of the way their employment status is now being assessed. We are reviewing the judgment and will work with each of the presenters to agree how we will help them.”
Seen by many as a ‘test case’, the verdict will come as a blow for around 100 BBC presenters in a similar boat. While the decision will likely result in further scrutiny of the BBC’s hiring practices, contractors are being urged to make sure they pay attention to their contracts and working practices. This will only become more important with off-payroll changes coming to the private sector in April that will put end clients and fee-payers on the hook for liabilities.
For a complete guide to the off-payroll working rules and IR35, see our comprehensive resources where you can download free guides on key contractor issues, here.