This case involved a BBC presenter: Christa Ackroyd, who was encouraged by the BBC to work through her own personal service company: Christa Ackroyd Media Ltd (CAM). The contracts between the BBC and CAM for Ackroyd’s services were for fixed terms of five years, then a further seven years. The work performed under those contracts amounted to a full-time job.
Ackroyd’s husband, Christopher Sutcliffe, was also a director and shareholder of CAM. As he is an accountant he helped to prepare the accounts and tax return for the company. Ackroyd had a second tax adviser: Mr Biggin, who she asked to check the terms of the arrangement with the BBC. He apparently advised her “everything was in order”.
Ackroyd does not appear to taken any specialist advice concerning IR35 in relation to her work at the BBC, and at no time was a deemed salary calculation prepared under the IR35 rules. HMRC decided that IR35 applied and raised tax assessments and penalties on CAM in excess of £420,000.
The Tribunal made much of the fact that the BBC had ultimate control of Ackroyd’s work and it had first call on her services, she was effectively banned from working for other media organisations. She could not provide a substitute to perform the BBC contract. Ackroyd was seen as part of the BBC and representing it.
If you could be subject to IR35, take some time to read the full Ackroyd case. As it is a first-tier tribunal judgment it doesn’t form a precedent which other cases must follow, but it does demonstrate what a judge will be looking for.
Have you taken independent advice on your contracts? Are you 100% confident that the terms of your contracts show that you are independent of the organisations you work for? Is the bookkeeper allowing the company to claim a deduction for expenses which have business and personal use, such as Sky TV subscription (as CAM did)?
If you have any queries please contact our office.
Written by the Tax Advice Network