Following a series of defeats, HMRC have won a First Tier Tribunal (FTT) case concerning the employment status of three BBC presenters who used personal service companies (PSCs).
The case concerned the working arrangements for presenters Joanna Gosling, David Eades and Tim Willcox. Unusually, the judges disagreed about the IR35 status of the presenters, although they were unanimous that the ‘imbalance of bargaining power’ between the presenters and the BBC was a significant factor in the case, saying “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 Tribunal heard evidence that each was required to operate a PSC to receive their payments from 2003 and 2004 until 2014. HMRC had issued the three with tax demands amounting to £920,000, of which around £600,000 has been paid. The tax authority was seeking £300,000, which was understood to consist largely of employers’ national insurance payments.
The judgment – a split decision resolved on a casting vote – said that the taxpayers had fallen foul of IR35 legislation which says that individuals who are employees in all but name should be liable for more tax.
However, this decision runs counter to other recent IR35 rulings involving payment arrangements for TV and radio personalities, as another FTT decided earlier this year that Lorraine Kelly was not liable to pay a £1.2m tax claim arising from her work via a PSC for ITV.
The BBC said: ‘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.’
Around 100 other BBC presenters are thought to have provided their services via a PSC, suggesting that there could be further tribunal hearings in the pipeline.
Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE) said: ‘That this case has taken eight years and ended up with an uncertain split decision shows how confusing and unfit for purpose IR35 is.
‘We will look at the judgement in detail but the uncertainty in the decision is likely to add to the chaos around this legislation. Recently, HMRC has lost the majority of these cases. There is little evidence that they or other experienced tax specialists are confident in how it works.
‘We remain at a loss how the Treasury expects medium-sized businesses to accurately apply IR35 to their contractors from next year when HMRC and tax judges struggle.’