In Christa Ackroyd Media Limited v HMRC [2018] TC06334, the First tier tribunal (FTT) held that a BBC television presenter was caught by the IR35 regulations.

Under the tax rules, commonly known as 'IR35'  where an individual is engaged via an intermediary (e.g. their own personal service company), under terms that would constitute employment by the end user if engaged directly, the intermediary must treat the fees received as income of the individual and operate PAYE.

Christa Ackroyd, presenter of BBC1’s “Look North” until 2013, was engaged by the BBC via her Personal Service Company, Christa Ackroyd Media Limited (CAM). She was required to operate through a company by the BBC.

The dispute was whether, if Ackroyd had been engaged directly by the BBC on the same terms, would she have been an Employee. The FTT looked at this as requiring two conditions, “mutuality of obligation” and control, which, if both met, would make the hypothetical contract one of employment unless other provisions of the contract are inconsistent with employment.

  • Mutuality of obligation
    • This was not in dispute: the BBC had to pay fees, and Ackroyd had to work for the BBC for 225 days per annum. This is sufficient to meet the condition.
  • Control
    • The BBC would not have given Ackroyd a free hand without at least an expectation she would abide by their Editorial Guidelines; as she was not contractually bound to follow the Guidelines, the BBC must have exercised control over her work.
    • While the BBC did generally act on Ackroyd’s suggestions, this was because she was an experienced professional, not because it was obligated to do so.
    • The FTT found that the BBC exercised sufficient control over Ackroyd to meet this condition.
  • Other factors
    • No right of substitution; this indicates employment, but the FTT did not consider it significant in the context of the anchor of a current affairs programme
    • Ackroyd appeared, to third parties, to be part and parcel of the BBC; again, the FTT did not consider this significant
    • The fact that CAM’s contract with the BBC was for seven years was significant and pointed towards employment
    • Fees were payable monthly; again, this was not considered significant.
    • Ackroyd could not make a loss in relation to the contract, and there were provisions for additional fees if certain targets were met (higher ratings than the equivalent ITV programme). The FTT held that these were neutral in determining whether the hypothetical contract would constitute employment.
    • Ackroyd used her own equipment to a limited extent. This was not inconsistent with being an employee.

In addition, the FTT considered deductions claimed for certain expenses reimbursed to Ackroyd by CAM. The deductions were considered on the basis that she was an employee:

  • Subscription to Sky TV
    • It was suggested that she needed to be aware of regional news and sport stories in order to do her job.
    • While the FTT did not dispute the business use, they did consider that the subscription was not used exclusively in performance of her duties.
    • Hence, the payments should have been subject to PAYE and NIC.
  • Use of Home
    • While Ackroyd did work at home, and had nowhere at the BBC to do her preparation work, no "conscious agreement" existed between CAM and Ackroyd for her homeworking arrangements
    • Nor was any evidence provided of the additional costs incurred
    • Hence, the payments to Ackroyd should have been subject to PAYE and NIC.

Comments:

The FTT noted it might have been better had HMRC met with Ackroyd before their initial decision; they instead based this on information from BBC employees, her accountant and her husband.

Ackroyd complained that HMRC did not approach a number of BBC employees who she said would support her contentions, but the FTT noted it was open to CAM to have called them as witnesses.

UPDATE: This has been appealed to the Upper Tribunal.

Links:

IR35

Personal Service Company

Employment Status

Working From Home

Compare Paya Limited and Tim Wilcox Limited v HMRC [2016] TC03856

External: Christa Ackroyd Media Limited v HMRC [2018] TC06334

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