Holmes, a broadcaster for over 40 years, was providing his services through a limited company called Red, White and Green Limited (RWG). The company was set up in 2001 and around five years later, Holmes started presenting on ‘This Morning’, continuing to do so for about 15 years. HMRC detailed four particular contracts between ITV and RWG during the tax period 2011/12 and 2014/15 and deemed these contracts caught by IR35 legislation.
During gaps between the contracting periods Holmes had worked on various other programmes, including Sky as a newsreader and also worked for ’This Morning’ via another company called Holmes and Away Ltd.
If he was ill, it would be ITV that would find someone else to cover and RWG did not get paid for that other person’s services. It was agreed early on that ITV required Holmes’ personal service and he was not permitted to provide a replacement. The notes from the ITV and HMRC meeting confirmed that substitution was not permitted and it was considered a less important factor in this case.
What were the contractual terms?
Under the terms of the contract with ITV, RWG was required to procure Holmes’ services ‘on an exclusive basis’ during the specified period or on dates agreed with the executive producer. The specified dates included a list of Fridays, with exceptions in July and August, and Monday to Thursday dates in other weeks. Holmes was required to be ‘as flexible as possible’ regarding any changes to the dates and also stipulated that when ITV cancelled any dates and could not reschedule for reasons other than Holmes’ unavailability then RWG was entitled to payment in full for cancelled dates.
The tribunal also heard that for the tax years 2011/12 and 2012/13, RWG’s main income stream was from the work for ITV on ‘This Morning’. Holmes told the tribunal that he had a specialist role as the ‘anchor man’ and had been hired by ITV as a maverick who could hold an audience because of his specific expertise. As such, he was ‘effectively in total control of what needs to happen’ when on air.
Holmes stated he did his own research, wrote and asked questions he developed and was only following a prepared script ‘10% of the time’. He described himself as a freelance journalist and broadcaster and as a ‘gun for hire on my terms’, with engagers signing up for his ‘USP and profile’. He said his work with Sky News between 2011 and 2015 occupied more of his time than his ‘This Morning’ duties and that he carried out a large number of other engagements on a self-employed basis.
Holmes was paid a fixed fee for each programme and the contract gave Holmes additional benefits including the provision of a car for travel to the studio, a clothing allowance of around £5,000 and expenses for travel and accommodation for certain trips.
The tribunal heard a number of arguments about the level of control ITV exerted over Holmes’ work. The judge concluded that whether Holmes was employed by RWG was not relevant to the analysis of whether ITV controlled Holmes under the assumed contracts. It then went on to consider mutuality of obligation between the company and the broadcaster and the issue of substitution of services.
Holmes’ representatives argued that he carried out many of his activities under his own name and was taxed as a person carrying on a profession.
Individual engagements should be looked at in the context of his business activities as a whole, and ‘what at first sight might appear to be employment, may simply be an incident of the worker’s overall professional activities.’
Similarly, it was wrong to view ITV as being able to control Holmes such as to be ‘his master’, as the situation was analogous to a chef hired to cook a meal. While ITV provided ingredients, it was Holmes alone who supplied the final result.
Holmes’ lawyer also argued that RWG was paid fees, rather than a salary, and there was no provision regarding pension, holidays, sick pay or training.
For its part, HMRC said RWG’s contract painted a picture of ‘regular, predictable and substantial part-time employment’ arguing that ITV had demonstrated the right to control, as it determined whether the programme went out and ensured it met with all regulatory guidelines. In that sense, it was not correct, as Holmes asserted, that the presenter was ‘answerable to no one but myself’.
In addition, Holmes was required to seek ITV’s permission to undertake certain other commercial activities and RWG took on no risk in the contracts, which were renewed.
The judge found there was sufficient mutuality and a framework of control to deem the contract between ITV and RWG as one of employment. ITV was required to provide work on specified dates for a fixed fee, and Holmes was required to accept the work on those dates for the fee.
The tribunal heard how contracts between ITV and RWG would stipulate fixed dates upon which Holmes was expected to provide services to ITV, and that Holmes was contractually entitled to payment in full for dates cancelled by the broadcaster. These terms appeared at odds to the actual reality, but were relied upon in the decision.
The judge said the fact that ITV lacks the ability in the immediate sense to control Holmes’ action in how he provided his services during a live broadcast did not mean that assumed relationship could not be categorised as an employment contract.
Controversially, in terms of control, ITV had full control of editorial content, was able to restrict Holmes’ other commercial activities and could require him not to appear on the programme in branded clothing. Even if at times, as he claimed, Holmes ‘did his own thing’, the contract contained the expectation of control.
Unusually, the judgment also stated that Holmes was required to comply with health and safety guidelines, he was not to endorse any products or services during the show and the fact that ITV had the contractual right to restrict Holmes’ other activities to some extent. These factors are compulsory in the normal course of business regardless of employment status.
Holmes also said that when he had a double hip replacement in 2016, ITV did not pay him any sick leave and he did not get any holiday leave. Holmes’ lawyer argued that unlike other ITV employees, Holmes did not have any of the employee benefits.
Judge Harriet Morgan rejected this view stating: ‘I cannot see that, under the principles set out in case law, the provision of any additional enhanced benefits, in excess of the statutory minimum, is an integral part of an employment relationship.
‘In my view, the fact that a putative employer has chosen not to provide such benefits does not of itself indicate that a relationship is not one of employment where the other substantive legal rights and obligations of the parties evidence the contrary.’
The case itself is very similar to the other presenter cases, and from the facts of the case it’s hard to recognise how Mr Holmes has been treated differently to Lorraine Kelly, who also worked at ITV yet who won her appeal. It is worth noting that the judgment makes reference to Eamon Holmes’ personality and appears not to take too kindly to his questioning.
With the new legislation just round the corner the case again reiterates the importance of the clarity of working arrangements and contracts between the parties.
The Tribunal concluded that ‘on that basis and, having regard to all other relevant factors, my view is that overall, throughout all relevant tax years, the assumed relationship between ITV and Mr Holmes was one of an employment rather than self-employment.’