HMRC has defeated three BBC presenters – Joanna Gosling, Tim Wilcox and David Eades – in a First-tier Tribunal, by ruling that they were inside IR35 for their 2007-2014 BBC contracts. The determination means the presenters, who were all made to use PSCs by the BBC, were akin to employees, and now owe £920,000.
Brookson Legal’s Joe Tully has suggested that HMRC will be “encouraged” by this ruling in the lead up to the legislation’s expansion into the private sector next year. He said: “With the changes to the IR35 rules planned for April 2020 … This public sector example could well inform similar claims in the private sector if hirers do not take the time to properly prepare for the rule changes.”
HMRC said it “welcomes” the FTT’s judgment, with a spokesman commenting: “Employment status is never a matter of choice … It is always dictated by the facts and when the wrong tax is being paid, we put things right. 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.”
However, experts have suggested that the case highlights just how complex achieving a correct IR35 determination is, and the problems that the private sector may face when it comes to applying the legislation next April. Freelancer and Contractor Services Association CEO, Julia Kermode, pointed out that two of the tribunal judges in the BBC case had contrasting opinions, saying: “…surely this just goes to illustrate how unfair it is to expect businesses to make IR35 determinations themselves … If FTT judges can’t reach an easy conclusion, how on earth can firms without access to expertise?” Mr. Tully echoed these statements, warning: “…the IR35 rules … can be extremely difficult to interpret … HMRC is asking businesses in the private sector to apply these extremely complicated rules themselves. It will then be hirers that HMRC holds responsible for taking reasonable care in making correct employment status assessments.”
The three presenters called their eight-year battle with HMRC “depressing”, but their adviser, David Kirk, has suggested the conclusion is not completely negative: “…it was obviously close, and the judges are clearly having difficulty with this issue … We did not lose on all the contracts … [So] it was by no means a Revenue pushover.” Moreover, the presenters were vindicated by the FTT rejecting HMRC’s case of attempting to prove their “carelessness”. The trio commented: “”We are both pleased and relieved to say that the tribunal has…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.”
The BBC’s behaviour in this case has also been called into question, with the judgment stating that the broadcaster was “in a unique position and used it to force the presenters into contracting through the PSCs.” Qdos CEO, Seb Maley, has suggested this revelation means the “onus should be on the engager to settle, not the presenters”. He bemoaned the fact the presenters “will be made to pay vast sums to HMRC, despite the judges finding they were ‘forced’ into working as self-employed by the BBC.”
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