In a landmark IR35 case that will be welcomed by PSCs, but will not be widely applied, television presenter Kaye Adams has been ruled as working outside IR35.
The journalist and television presenter, best known for her role as one of four anchors on ITV show Loose Women, won her case based on being in business on her own account.
HMRC v Atholl House Productions Ltd has been described as an unusual case because it creates case law precedent that will be of benefit to celebrities and those in the spotlight but will not necessarily be of any help to contractors in general.
The in-business factors considered in the case outweighed the key factors of mutuality, control and personal service, which could be significant but is not to be relied upon for contractors as their sole line of defence.
The key point that won the case for the Loose Women presenter was her 20 years’ industry experience on a freelance basis, something only veteran contractors can call upon.
The Upper Tribunal found that Kaye Adams had continued her work as an independent contractor rather than as an employee. So, even though control and mutuality were satisfied, the third test – where the court determines whether under the hypothetical contract Ms Adams would have been an employee of the BBC, was not satisfied.
Looking at the overall picture
The case ultimately came down to impressions versus reality, both in terms of the contract and what it means to be in business as a professional freelancer.
HMRC argued their case based on case law, whereas Ms Adams believed she was a genuine freelancer based on her own view and the impression of what being a freelancer actually means.
The Upper Tribunal agreed with HMRC’s view regarding how case law applied to this case, but also looked at the whole picture and decided that Ms Adams’ impression was correct.
The tribunal accepted that throughout her career Ms Adams had tended to carry out her profession as an independent contractor rather than an employee.
This indicates that how a contractor operates as a business in its own account can be enough to overrule control and mutuality of obligation, which could be significant in how contracts are determined for IR35 employment status.
Being ‘in business on your own account’ has risen in importance as a result of this ruling and contractors should ensure they can prove they are in business through being able to prove their running costs; risks of running a business; insurance policies; business website, email and business card; and client invoices. They should also ensure they do not accept any perks of employment.
Caunce O’Hara offer a range of business insurance solutions to help contractors stay protected including Tax Enquiry & Legal Expenses Insurance, which provides cover for costs incurred by a HMRC investigation. Tel 0333 321 1403.
Markel Tax offer specialist IR35 tax services to help end client decision-makers ensure they are compliant with the legislation. Agencies who may be concerned about their fee payer liability can also consider insurance. To find out more, please contact Markel Tax on 0345 223 2727.