In Paya Ltd, Allday Media Ltd & Tim Willcox Ltd v HMRC [2019] TC7377 the First Tier tribunal found IR35 applied to the personal service companies of three BBC presenters but their advisers did not act carelessly.

'IR35' refers to a set of tax and NICs rules which apply where an individual supplies services for an end client via an intermediary they control, such as their own Personal service company "PSC") and if the individual were to supply the services directly to the end client, the end client would treat the individual as their employee.

S36 TMA1970 extends the time limits for raising determinations from 4 to 6 years where there is a loss of income tax brought about carelessly by a person or by another person acting on their behalf.

Joanna Gosling, Tim Willcox and David Eades are news presenters who were all engaged by the BBC through their own personal service companies.

  • HMRC issued determinations to each company for PAYE (regulation 80) and NIC (section 8).
    • These were for several years and on the basis that, had the contracts been directly between the presenters and the BBC, they would have been employment contracts.
  • Several determinations were raised outside the normal time limits. HMRC said longer s36 time limits applied; the advisers dealing with the PSCs were acting on behalf of the PSCs and had carelessly brought about a loss of tax.
  • Questions were raised whether the discovery rules at s29(1)TMA applied and, if so, were the discoveries stale.

The FTT, by the casting vote of the panel chairman, held:

  • IR35 did apply but the presenters’ advisers had not been careless.
  • The s29(1) discovery provisions did not apply; these were determinations not assessments, and regulation 80 has its own threshold but if s29(1) did apply the discoveries were not stale

Reasoning behind the IR35 decision:

  • The BBC was contractually obliged to call on the presenters for a minimum number of days and pay the full contract fee regardless. Tthe PSC’s were obliged to provide the presenters’ for that minimum number of days.
  • There was “sufficient mutuality and at least a sufficient framework of control to place the assumed relationships between the BBC and the Presenters in the employment field”.

The carelessness point:

  • It is not enough, for an adviser to be held to have acted carelessly, that they took a view contrary to that of HMRC or the tribunal, especially where determining whether the legislation applies depends on making a difficult value judgment.
  • The question is whether an adviser took such care as can reasonably be expected of a reasonably competent adviser.
    • It is open to professionals to rely on their own assessment of the law rather than HMRC’s view of it.
  • HMRC had not proved the advisers did not consider IR35 or carelessly took the view that IR35 did not apply. In the absence of further evidence, it was speculation whether, when and to what extent they had considered IR35 and, if so, what they considered and how they approached this.


At 177 pages this is a long decision which spends a long time exploring all relevant case law on employment status.

What is of more interest than the IR35 decision, is the growing trend of HMRC seeking to extend time limits by arguing that the taxpayer’s advisers have been careless, thereby making the taxpayer themselves careless, but then failing to discharge the burden of proof in establishing that careless behaviour has occurred.

Links to our useful guides:
Personal Service companies and tax
What's new and recent case law

IR35: Off-payroll working
What are the IR35 rules? When do they apply?

Regulation 80 and 72 assessments for PAYE
Useful cases for advisers if you are unsure of these complicated rules.

Discovery Assessment
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

External link:
Paya Ltd, Allday Media Ltd & Tim Willcox Ltd v HMRC [2019] TC7377



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