HMRC loses another high-profile presenter IR35 case

TV and radio host Adrian Chiles has won a seven-year battle with HMRC after a First Tier Tribunal found that the IR35 legislation did not apply to Mr Chiles, who provides his services through his personal service company Basic Broadcasting Limited.

HMRC had claimed that contracts carried out between 6 April 2012 to 5 April 2017, relating to three BBC contracts and two ITV contracts fell within the scope of IR35 and that additional tax and National Insurance Contributions were due from Basic Broadcasting Limited to the tune of approximately £1.7m. 

The Tribunal found that both the first stage test and second stage test used to identify a contract of service as set out in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 were satisfied.

Whilst the Tribunal was satisfied there was mutuality of obligation (first stage test) in relation to the relevant hypothetical ITV and BBC contracts and there was a sufficient framework of control (second stage test) to establish a prima facie case that Mr Chiles would be performing his services as an employee, it was considered that that control in either case was not a compelling factor.

More importantly the Tribunal considered that the most significant factor that might displace the prima facie case that Mr Chiles was an employee under the hypothetical contracts was whether he was in business on his own account and, therefore, establishing that the other provisions of the contract or other factors were not consistent with it being a contract of service.  If it was found that the other provisions of the contract were consistent with it being a contract of service then the third stage test under Ready Mixed Concrete would be satisfied.

Significant evidence was put forward by Mr Chiles and his representatives to demonstrate that he was in business on his own account. This evidence included: –

  • He provided his services as a broadcaster and journalist to a significant number of clients
  • He paid 15% of his income fees to his agent Avalon to promote and manage his career
  • He hired a personal assistant to manage his diary and liaise with his agent
  • He also appeared in commercials, presented awards at award ceremonies, and spoke at commercial conferences
  • He wrote for several national newspapers
  • He was entitled to 50% share of production profits together with Avalon for a show he helped to create

Considering the position as a whole, the Tribunal found that the hypothetical contracts were part and parcel of Mr Chiles carrying on business on his own account albeit through his company Basic Broadcasting Limited. The contracts were for services and not contracts of employment and therefore the conditions for IR35 to apply were not satisfied.

Whilst the outcome of this case is encouraging, it does emphasise potential issues end-clients in both the private sector and public sector face when considering whether the off-payroll working rules (IR35) apply. Will end-clients hold sufficient information or be aware of the importance of establishing a full picture of the freelance contractor’s business and clients, to be satisfied that they are in business on their own account?

This could result in status determinations being made whilst only considering part of the overall picture, potentially leaving them open to challenge by HMRC.

The Guild operate compliant solutions to the engagement of freelancers including individuals who provide their services through their own intermediary such as a PSC, across construction and other sectors.

If you are an end-client business wishing to engage freelancers but are concerned over meeting the compliance requirements, then contact The Guild for a no-obligation discussion regarding your engagement process.

GuildHUB is an information resource, provided free of charge by The Guild, for accounting professionals and their clients.  If you wish to contact The Guild, please email contact@trusttheguild.com.

The content of this article is for guidance only and shall not constitute advice. Please seek independent advice or contact GuildHUB for information about its services.

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Julia Clutterbuck
02/2022
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