‘This Morning’ presenter Eamonn Holmes is to challenge an employment status decision made last February that confirmed he was liable to pay £250,000 in unpaid taxes. Holmes has filed an official court listing, claiming that the Treasury is attempting to rewrite the rules.
Holmes worked via his limited company Red, White and Green. However, the taxman disputed his status as a freelancer, demanding the TV presenter pay. Hundreds of BBC presenters have also been targeted by HMRC, which argues they are employees and should pay income tax and National Insurance up to 45 per cent tax, not 18 per cent corporation tax.
Holmes has said his was a test case and that others could be targeted if he lost. He added: “They are trying to prove our jobs are regular and guaranteed. Yet they could go at any moment.” The IR35 employment status case concerned the contracts between Holmes’ own personal service company, Red, White and Green Ltd, and ITV between 2011-2012 and 2014-2015. The decision, as is common in high-profile cases, boiled down to both Mutuality of Obligation and Control.
Judge Morgan commented in the case notes, saying: “I have concluded that there was sufficient mutuality and at least a sufficient framework of control to place the assumed relationship between ITV and Mr Holmes in the employment field.” The status tests that helped to get presenters Kaye Adams and Paul Hawksbee off the hook are precisely what Eamonn Holmes fell foul of. Meanwhile, fellow ITV presenter Lorraine Kelly won her appeal after arguing that she does not appear as herself on TV but as a persona known as ‘Lorraine’.
HMRC recently updated its IR35 manual for the creative industries to reflect the fact that in the entertainment industry, the absence of a substitution clause is not determinative of employment status. Instead, IR35 status “must be determined by reference to other factors,” appearing to allude to Control, Mutuality of Obligation and Financial Risk.
But mere wording about engagements in general terms won’t be enough to save creatives in the event that a tax inspector investigates. Given the ambiguity of employment status, it’s important to carefully consider the contract itself and the way in which the service is delivered day-in, day-out.
Contractors and businesses are now advised to use the remaining time until April 2021 to prepare for the changes ahead. If you’re looking for more information on IR35, our free comprehensive guide gives you a clear overview of the legislation to date. 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