April 2022 saw the Court of Appeal deliver verdicts in the cases of TalkSport presenter Paul Hawksbee (Kickabout Productions Ltd) and journalist and TV presenter Kaye Adams (Atholl House Productions Ltd). But do these verdicts provide clarity for contractors?
In the Hawksbee case, the appeal by the taxpayer was dismissed, leaving the appellant with a £140k tax bill whilst Kaye Adams’ case was referred back to the Tax Tribunal to reconsider their decision in favour of the appellant in the light of guidance from the Court, leaving a potential £120k tax liability hanging in the air.
Perhaps the primary learnings from both cases are the importance of the reality of the contract and the continuing confusion and uncertainty of being classed as a worker or being regarded as self- employed within the intermediaries’ legislation.
Paul Hawksbee’s company provided TalkSport with his services for a certain number of radio shows. There was both mutuality of obligation and a material element of control exercised by the broadcaster. The taxpayer’s argument that he was self-employed was dealt a serious blow by the wording and intent of additional schedules to the main contract.
It is rare for judges to show any emotions in their verdict but there was a clear irritation on the part of Judge Richards that the appellant’s legal team had done no more than try to re-heat his claim to be outside IR35 without adducing any further arguments.
The Atholl House Production case was won by HMRC in the Court of Appeal in part because of a difference of opinion between that Court and the Upper Tax Tribunal on the application of an earlier tax case (Autoclenz Ltd v Belcher). This had concluded that the written contracts didn’t reflect the actual agreement between the parties.
As a consequence, the case was referred back to the Upper Tribunal to re-address the issue with the Court of Appeal’s guidance.
In due course, both Paul Hawksbee and Kaye Adams may get an opportunity to take their appeals to the UK’s top court – the Supreme Court, but that remains to be seen.
Although HMRC may consider that the Atholl House case provides them with sufficient ammunition to challenge some other high-profile losses like that of TV presenter and personality Adrian Chiles, and again we shall have to wait and see.
These high profile IR35 cases certainly capture the headlines and continue to highlight the complexity of certain employment status arrangements. They concentrate on the principles of mutuality of obligation, control, substitution and the other factors pointing to inside/outside IR35. However, they ultimately tend to be determined on the detail of each contract and the working practices adopted.
Although these pioneering IR35 cases are important in establishing guiding principles in the grey landscape of employment law, are they of great interest to most contractors? Because these cases tend to arise from complicated historical arrangements are they relevant to you?
Hopefully, contractors using an IR35 review service like PayStream’s IR35 Comply will never be in a position where they face a long, expensive battle with the tax man over their employment status. Proper evaluation of the nature of each assignment at the outset should deliver a clear status determination without the uncertainty faced by these high-profile individuals.
