As a contractor, IR35 is a piece of legislation in which you must have a sound understanding. When you receive a contract, it is important that everything in that contract makes sense to you, and that each term is clear. This acts to minimise any confusion between you and the client, if your IR35 status is ever investigated.
HM Revenue and Customs (HMRC) have investigated over 30 cases since 2001 and have won thirteen of these. In the last fifteen cases, they have only won two. One of these successes in the eyes of HMRC involved Christa Ackroyd, a former BBC presenter.
Ackroyd worked for over a decade as a regular presenter on Look North, a regional news programme covering Cumbria and the North East of England.
During February 2018, Ackroyd lost her first-tier tribunal, after it was decided that she was working in a similar fashion to that of an employee, rather than working of her own accord. The control which the BBC had over her working conditions and agreements was a major factor in the court’s ruling. HMRC argued that she owed £419,151 due to unpaid Income Tax and National Insurance Contributions during the tax years 2006-07 to 2012-13, as she had claimed that she was self-employed when she was not.
A second decision
Disappointed with this decision, Ackroyd appealed against the court’s ruling and her appeal was escalated to the Upper Tribunal (UT). Again, judges in the UT mentioned that the level of control the BBC had over Ackroyd was the tipping point for their decision. Ackroyd’s team argued that the absence of line management and appraisal process meant that there was an insufficient level of control, however the UT believed this wasn’t strong enough to dispel the relationship between the BBC and Ackroyd. Ackroyd was paid a monthly fee by the BBC and was made to attend events throughout the year. They also had first call on Ackroyd’s services for 225 days of the year, meaning that she had to be available when the BBC required her. She was not permitted to provide services to other publications without the consent of the BBC, leaving her with little room to negotiate her working terms.
Judges in the UT upheld the decision made in the first-tier tribunal, stating that she was a BBC employee during the years she presented Look North and was therefore liable to pay Income Tax and National Insurance Contributions.
Tightening their grip
This case is just one example of how HMRC are tightening their grip when it comes to IR35. It also raises questions about not only the BBC, but also other businesses who have taken a similar approach to hiring limited companies. It is essential to consider whether any regulatory or external guidelines influence the level of control over contractors. Next year’s reforms to the private sector introduce requirements for end hirers to make the IR35 assessment when either a medium or large company is involved.
With you all the way
The case of Christa Ackroyd proves just how important it is to be sure of your IR35 status. We understand that there is a lot to get your head around, that’s why help is at hand should you need any answers. Our IR35 experts are here to help you with any questions you may have, please do not hesitate to get in touch with us.