There have been three high profile IR35 cases heard at the FTT recently, all of which involved TV or radio presenters. HMRC won the first case concerning Christa Ackroyd, but has lost the cases concerning Lorraine Kelly and Kaye Adams.
The timing of these cases may have been managed to ensure what was perceived as the weaker case was heard first. HMRC referred to the Ackroyd judgment in evidence for the Kelly and Adams cases, but as Ackroyd was a FTT judgment it does not set a precedent and the tribunals hearing later cases are not obliged to follow it.
In all three cases the tribunal paid close attention to the written agreements, but gave equal balance to evidence from the presenters’ colleagues to understand how the contract was performed in practice. For example, in the agreement with Adams’ company the BBC had the right to ask her to attend editorial training sessions and to undertake a medical, both of which could have been indicators of an employment contract. However, as those rights were never exercised, the tribunal ignored them.
A criticism of the CEST tool, which HMRC encourages employers to use to determine employment status, is that it ignores the test of mutuality of obligation (MOO) between the parties to provide work, and to perform the work. If there is a MOO, this will be a strong indication of an employment contract. However, the FTT found there was MOO for Kelly and no MOO for Adams case, and both cases were judged to be outside IR35.
A more important factor was the control that the broadcaster had over each presenter. The higher the degree of control exercised by the engager the greater the likelihood of the relationship being an employment contract. Kelly and Adams were seen as having far more of a freehand over exactly what was included in their programmes than Ackroyd, which pointed towards a self-employment relationship.
In all three cases the judge stood back and viewed the evidence as a whole, which is something that the CEST tool does not do. Indeed, in Adams the judge considered the BBC contracts in the context of her 20-year freelance career.
When defending an IR35 case always look for evidence beyond the written contract, and consider how this evidence can be presented before a tribunal or in an ADR session. Our employment status experts are happy to help you with that.
Written by the Tax Advise Network