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In Albatel Limited v HMRC [2019] TC07045 the First Tier Tribunal allowed appeals against assessments of £1.2m on Lorraine Kelly’s personal service company; IR35 did not apply, ITV did not employ her, it was buying her brand.

The employment intermediary rules, known as IR35 impose employment taxes on a Personal service company (PSC):

The case also involved the question as to whether Agent's Fees paid were a deductible employment expense.

Between 2012 and 2014 Lorraine Kelly was contracted, via her company Albatel Limited which was set up in 1992, to present two shows for ITV Breakfast Ltd, Lorraine and Daybreak.

She maintained that she was a self-employed entertainer and theatrical artist who was playing a part when she presented the shows in question.

HMRC issued a regulation 80 determination and notice of decision in respect of Class 1 NICs arising from the application of the IR35 rules for £1,212,528 contending:

The FTT in allowing the appeals analysed whether there was a contract of service, or for services:

On the question of a deduction for Agent's fees, the FTT said:

"We do not doubt that Ms Kelly is an entertaining lady, but the point is that for the time Ms Kelly is contracted to perform live on air she is public “Lorraine Kelly”; she may not like the guest she interviews, she may not like the food she eats, she may not like the film she viewed but that is where the performance lies, as no doubt with other entertainers such as Ant and Dec or Richard and Judy. For that reason, we have no hesitation in concluding that Ms Kelly is a “theatrical artist” and the legislation is satisfied such as to make the expenses deductible."

Comment

In contrast previous cases involving the BBC have resulted in the FTT upholding HMRC’s decision to apply IR35. It is reported that more IR35 appeal cases involving ITV presenters are likely to reach the tribunal in the near future.

Ant and Dec apparently now join the list of TV presenters who count as entertainers!

Links to our guides:

IR35

Personal Service Company (PSC) tax

Employment Status

Exemption for paid and reimbursed expenses

 

What expenses can employees claim? Agents fees

External link:

Albatel Limited v HMRC [2019] TC07045