HMRC Plays Fast and ‘Loose’ with IR35 Rules
Loose Women presenter Kaye Adams has triumphed over HMRC, which demanded £124,441 in PAYE and NIC from her personal service company on the basis that IR35 applied.
This is the third in a series of cases involving presenters (following Ackroyd and Lorraine Kelly) who were accused of not complying with the IR35 rules in respect of contracts performed through their personal service companies. We understand there are further IR35 cases concerning actors and presenters which are in the tribunal pipeline.Advertisement
Kaye Adams has worked as a freelance journalist for over 20 years, writing for various newspapers and magazines, as well as appearing on TV and radio programmes including the popular daytime show Loose Women. She has also co-authored two books and hosts numerous corporate events. Adams works through her company Atholl House Productions Ltd, which was the appellant in this case (TC07088).
The dispute concerned two contracts with the BBC to present a series of programmes on Radio Scotland in the periods 16 March 2015 to 31 March 2016, and 4 April 2016 to 31 March 2017. HMRC had also raised assessments under the IR35 rules in respect of income from contracts operated in 2013/14 and 2014/15 but effectively dropped the tax demands for the earlier years just before the tribunal hearing.
As with the Kelly and Ackroyd cases, the judge had to determine whether a hypothetical contract between Adams and the BBC had the attributes of an employment contract or if it appeared to be a contract for services (a self-employed arrangement), in which case IR35 would not apply.
The tribunal concentrated on the written contracts between the BBC and Atholl House Productions Ltd, which required the company to provide the services of Kaye Adams to present “The Kaye Adams Programme” each weekday morning on BBC Radio Scotland. The contracts specified that at least 160 programmes would be presented for a minimum fee of £155,000, and any further programmes would be paid for at a rate of £968.75 per programme. In other words, the company was paid a “piece-rate” of £968.75 per programme.
The tribunal also heard evidence from the programme’s editor and producer, but the judge regretted that he did not hear evidence from the BBC’s legal and business affairs team responsible for dealing with the two written agreements at the centre of this case.
The judge considered whether the following attributes of the hypothetical contract between the BBC and Adams existed:HMRC & policySponsored
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Mutuality of obligation (MOO)
The question of whether Adams was obliged to provide her services to the BBC and if the BBC was obliged to pay her (a mutuality of obligation) centred around the issue of who had first call on Adams’ time.
Although the written contracts said the BBC had first call, and that the Adams had to obtain the BBC’s permission to enter into other engagements, the evidence given by the programme editor and producer was clear that this restriction did not exist in practice. The judge concluded that the written agreement did not reflect the actual contract performed by the parties.
The BBC did exercise editorial control over the content of the programmes, but it did not have control over Adams’ work outside of BBC Radio Scotland. The BBC could sanction Adams retrospectively if she took actions which brought the BBC into disrepute but that did not amount to control.
Right to provide a substitute
The tribunal found that Adams did not have the right to provide a substitute under the actual agreement performed with the BBC, although there was a substitution clause in the written agreement.
In business on own account
The BBC contracts in the two years covered by this case amounted to around 50% of Adams’ income in that period, but the tribunal thought it inappropriate to view those two years in isolation in respect of her overall professional career.
Adams stressed in her evidence that it was important for her to maintain her brand, particularly as part of her role on Loose Women, as this led onto many other engagements. The tribunal concluded that Adams is indeed in business on her own account and her professional identity is far more connected with Loose Women than it is with the BBC.
Part and parcel of organisation
The written contracts gave the BBC the right to ask Adams to attend editorial training and to undertake a medical, but it never exercised those rights. The tribunal concluded that Adams was not seen as part of the BBC organisation but instead as an external services provider.
Employee obligations and benefits
The relationship between the BBC and Adams was not intended by either party to be a relationship of employer and employee. The written agreements did not give Adams any entitlement to sick pay, maternity leave or pension contributions.
The judge concluded that the hypothetical contract was one of provision of services and not an employment contract, so IR35 did not apply.
Contrast with Ackroyd
HMRC’s evidence used the Ackroyd decision (TC06334) to support their case. However, Judge Beare made it clear in his judgment in Adams case that he was not obliged to follow Ackroyd as that was an FTT decision and thus not binding on him.
Other points which distinguish Adams’ position from Ackroyd were:
- Ackroyd’s contract was for seven years, followed by a five-year contract, whereas Adams’ contracts were each for one year.
- Ackroyd’s other non-BBC income was minimal, whereas Adams’ non-BBC income was around 50% of her income for the years in question.
- The FTT found that the BBC did have first call on Ackroyd’s time, she attended the BBC training sessions and was told who she would be interviewing. Adams’ contract with the BBC had none of those features.
- Ackroyd was required to seek BBC consent for her non-BBC engagements, whereas Adams did not.