The results of a case involving BBC Presenters against the HMRC have emerged, in which HMRC won. According to IR35 specialist, Qdos the IR35 Tribunal concerned BBC journalists, Joanna Gosling, David Eades and Tim Willcox. It was decided they had been ‘forced’ into working outside IR35.
“It’s of real concern that at present, these individuals look like they will be made to pay vast sums to HMRC, despite the judges finding they were ‘forced’ into working as self-employed by The BBC,” said Seb Maley, Qdos CEO. “The onus should be on the engager to settle, not the presenters, who it’s very difficult to label as guilty.
“With around 100 other BBC presenters in the same boat, we could see similar verdicts in time,” he said. “However, each case needs to be examined on its own merit and if it’s decided the BBC left someone with no choice but to work outside IR35, then these individuals must be helped financially.”
Julia Kermode, CEO of the FCSA commented on the case: “Given that two tribunal judges took opposing views, it was decided on a casting vote of another judge. Surely this just goes to illustrate how unfair it is to expect businesses to make IR35 determinations in the light of off-payroll legislation due in 2020 – if judges can’t reach an easy conclusion how on earth can firms without access to expertise be able to reach a conclusion?”
“The outcome from today’s cases may well deter businesses from engaging people who work for themselves and may deprive firms of the vital skills they need,” Kermode added. “We dispute that personal service companies are a mechanism to avoid tax, they are a perfectly legitimate way of someone being in business on their own account which some people prefer to being a sole-trader because it separates business and personal liabilities.”
Kermode also said: “It is essential that HMRC does not penalise everyone working through PSCs in a blanket fashion as they bring much-needed flexibility to both the freelancer and businesses that engage them on a short-term basis, just as the Lords Select Committee stated in its report in 2014.
“I have a great deal of sympathy with the presenters,” said Dave Chaplin, CEO of ContractorCalculator. “This should not be a story of well-paid presenters trading through companies to avoid tax but about the BBC and other broadcasters pressing hundreds of existing presenters to form companies because it continued to give the broadcaster the flexibility it desired whilst circumventing its own future tax risk by passing it to the presenters.
“The presenters were investigated under the private sector IR35 rules, Chapter 8 of ITEPA, that was enacted in April 2000,” explained Chaplin. “Since then, in April 2017, the new off-payroll tax, chapter 10 of ITEPA, has been introduced to reform IR35, which will also hit the private sector in April 2020.
“The miserable truth about all this is that had the presenters been investigated under the new rules then the broadcaster would have had to pick up the extra tax bill they passed onto the presenters, by way of the employers NI they sought to avoid.
“HMRC still fails to grasp the simple concept that there is a freelance premium, and because of this, freelancers end up generating more in tax by operating this way compared to employment,” says Chaplin. “HMRC should be thanking freelancers for their contributions, not victimising them as tax avoiders using this cruel legislation.”
“With further IR35 reform approaching, companies engaging contractors should take note,” concludes Seb Maley. “No firm should force individuals into a working arrangement purely for its own benefit. IR35 status must be assessed fairly. In doing so, situations like this will be avoided.”