The general election fast approaching. Self-employment has been high on the agenda, with several key political figures suggesting a review of off-payroll rules may well be on the horizon.
HMRC wins IR35 tribunal case involving BBC presenters
Three BBC presenters have lost their IR35 tribunal case against HMRC, which could potentially have far-reaching consequences across the industry and indeed the UK employment space.
The presenters, Joanna Gosling, Tim Wilcox and David Eades, now owe £920,000 in unpaid taxes as a result of their classification as disguised employees, despite being told to use personal service companies at the time of engagement.
Following a series of high profile defeats, this case was a narrow victory for HMRC demonstrating what many call a ‘lack of clarity’ around the reform, which was highlighted by this particular case.
Two tribunal judges involved with the case disagreed over the employment status of the three presenters. However, the third judge casted the concluding vote, stating 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”.
In the 180 page judgement published last week, the tribunal also stated that there had been an “imbalance of bargaining power” between the presenters and the BBC.
It said, “The BBC were in a unique position and used it to force the presenters into contracting through personal service companies and to accept reductions in pay”.
The BBC has found itself under scrutiny too as a consequence of the case. The fact that it is the presenters who have been left with the tax bill, despite the decision as to whether or not to operate through a personal service company arguably having been taken away from them, is at the heart of the debate.
In a joint statement released by the three presenters, they said, “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,” they said. “It has been a depressing and stressful period for each of us. However, we are grateful that the judgment, in its entirety, shows we have acted in good faith throughout.”
Following the victory, HMRC welcomed the judgement, “It is right that an individual who works through a company, but would have been an employee if they were taken on directly, pays broadly the same amount of tax and national insurance contributions as employees”.
The decision could shine the spotlight on more than 100 other presenters who were engaged through personal service companies, meaning they may now have to pay back years of tax they have could be deemed to owe.
The BBC also issued a statement on the matter, “We understand and regret the stress this has put people under, and have set out the principles of how we will help presenters in a way that is fair to the individuals involved, to HMRC and to licence-fee payers.
“Recent hearings involving presenters from across the media industry have produced a range of outcomes and this split judgment further demonstrates the confusion of the tax system for those working in broadcasting.
“We have tried for a long time to agree to a set of guidance with HMRC which gives certainty for the media industry. It’s vital that HMRC now provides greater clarity which is still needed to avoid others having to go through this ordeal.”
The IR35 reform hits the private sector in April 2020. If you have any concerns about your IR35 status and whether or not IR35 applies to your workforce, then we strongly recommend speaking to an expert.
Some other articles you might be interested in reading:
- Everything you need to know about IR35
- Guaranteed: IR35 is bound to impact your business
- IR35 confusion could only get worse according to IPSE