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In May 2019 we wrote about HMRC’s defeat in the Albatel case involving Lorraine Kelly and whether she would be deemed to be an employee of ITV for purposes. An article written by Dawn Register and Rob Woodward on this case was also published in Tax Journal.
Since then there have been further IR35 cases held, including another involving a media presenter. We also understand further rulings in respect of hearing involving media personalities are due to be published soon as part of what appears to be an ongoing campaign by HMRC into the tax affairs of TV and radio presenters.
The latest case involving a presenter concerned Paul Hawksbee supplying his services to the Talksport radio station through his company Kickabout Productions Ltd. HMRC sought PAYE/NIC on the basis Mr Hawksbee was engaged by Talksport on a hypothetical employment contract and therefore IR35 applied.
The ruling in the case, which can be read here, is that Mr Hawksbee was not engaged by Talksport on a hypothetical employment contract. In particular the First Tier Tribunal considered there was a lack of control by Talksport over the work undertaken and there was an insufficient degree of mutuality of obligation to provide and accept work to indicate employment.
Another major recent development has been the publication of the draft legislation seeking to shift the obligation for operating PAYE/NIC where IR35 applies. This draft legislation, which is still subject to parliamentary scrutiny and enactment, states that with effect from 6 April 2021 all businesses with an annual turnover exceeding £10.2m who engage with workers through limited companies will be obliged to assess whether IR35 applies and inform the worker of that decision including the basis for making that decision.
If the business directly contracts with the limited company and considers IR35 applies, they will be required to operate PAYE, NIC (including employer’s NIC) and the Apprenticeship Levy on the payments made to the worker’s company. If there is an agency involved in the provision of the worker, the decision whether IR35 applies must also be communicated to the agency and the agency will be obliged to operate PAYE/NIC as appropriate. That obligation to operate PAYE/NIC only passes from the business to the agency when the IR35 decision has been communicated and even then the worker has a 45 day appeal window if they disagree with the decision.
HMRC’s preferred approach to determining whether IR35 applies or not is through the use of their Check Employment Status for Tax (CEST) tool. Following representations made during the consultation process leading up to the draft legislation, criticism from representative bodies including the Chartered Institute of Taxation, as well as comments in the Kickabout Productions case around the lack of clarity in determining employment status, extensive guidance and improvements to CEST have been promised to be released by HMRC over the summer.
For other articles relating to employment status, IR35 and off-payroll labour, please view the following related BDO updates:
For any questions regarding dealing with HMRC, please do not hesitate to get in touch for a no-obligation consultation.