In Basic Broadcasting Limited v HMRC [2022] TC08400, the First Tier Tribunal (FTT) found that while two substantial broadcasting contracts for the BBC and ITV had the features of employment contracts, they made up part of a wider business of TV show host, Adrian Chiles. As a result, the IR35 intermediaries legislation did not apply and the taxpayer's appeal was allowed.

  • Adrian Chiles started working for the BBC in 1992, in or around 1996, he was required to cease his employment and provide his services through a company, Basic Broadcasting Limited (BBL).
  • By 2010, BBL was providing the services of Mr Chiles to the BBC for programmes including, The One Show and Match of the Day.
  • In June 2010 BBL’s contracts with the BBC ceased and it undertook to provide Mr Chiles’ services to ITV, the contractual relationship with ITV continued until 2015.
  • In 2013 BBL provided Mr Chiles’ services to BBC radio and this relationship has continued throughout the period in question.
  • HMRC made determinations under the IR35 legislation in relation to two ITV contracts and three BBC contracts covering the 2012-13 to 2016-17 tax years on that basis that Mr Chiles is an employee under each respective contract with ITV and the BBC (collectively the broadcasters).
  • The Income Tax and National Insurance determinations, against which BBL appealed, exceed £1.2m of Income Tax and £460k of National Insurance Contributions.

The law

Case law has identified three factors that would need to be considered when viewing the hypothetical contracts between the worker and the end client.

  1. Is there an obligation for the end client (the broadcasters) to provide work and for the worker (Mr Chiles) to do that work? (Mutuality of obligation).
  2. Did the end client have sufficient contractual control over how the worker undertakes their work? (Control).
  3. Are there other factors that need to be considered which suggest the contracts are not employment contracts? (Other factors).

The decision

The FTT found that:

  • As agreed between the parties, the BBC contracts possessed the required mutuality of obligation to be considered contracts of employment.
  • The ITV contract also had mutuality of obligation and were contracts of employment as:
    • While there was no contractual obligation for ITV to provide work to Mr Chiles, it was anticipated that work would be offered and undertaken and this proved to be the case.
  • The broadcasters had sufficient control over the way in which the services were performed to render the contracts of employment as:
    • While there was no ‘in the moment’ control, the broadcasters had regulatory and editorial control over the content that Mr Chiles was creating.
    • The broadcasters could require Mr Chiles to comply with reasonable requests.
    • The broadcasters had control of rehearsals, running orders for programming as well as responsibility for production and content.
    • That Mr Chiles had agreed to provide services at specific times and locations was a feature of the contracts rather than an example of the broadcasters possessing control over his duties.
    • That Mr Chiles was an employee of BBL was not a factor the FTT considered.
  • Despite the contracts having the mutuality of obligation and control features, Mr Chiles was (in the absence of BBL) in business as:
    • BBL undertook significant other work throughout the period in question and while working under the broadcast contracts. Neither party considered these assignments to be employed relationships.
    • BBL undertook additional commercial projects some of which did not bear fruit. Others resulted in Intellectual Property which produced income for BBL.
    • BBL engaged a PA and an agent to promote Mr Chiles's career and build his reputation.
  • When viewing the picture as a whole, the broadcast contracts were undertaken as part of that business and they could not, therefore, be viewed as employment contracts as:
    • Mr Chiles was providing his services to a number of clients (including both broadcasters) at the same time.
    • The broadcast contracts were not full-time contracts which gave Mr Chiles the time to conduct other business, which he did.
    • Research and preparation for the services provided under the broadcast contracts were undertaken as Mr Chiles saw fit and using his own equipment.
    • He provided some of the tools of his trade himself, particularly his custom made earpiece.
    • While there was no financial risk in the contracts as they represented fixed fees for services, this risk did not change irrespective of whether he was employed or not, so this was not determinative.
    • No weight was given for the stated contractual intention that the contracts did not represent contracts of employment.

The appeal was allowed.

UPDATE: HMRC have lodged an appeal with the Upper Tribunal. The hearing is awaited. 

Useful guides on this topic

IR35: Off-Payroll Working
What is IR35? How does it work? How is the deemed payment calculated? What expenses are deductible?

Off-Payroll Working: At a glance (Freeview)
What is Off-Payroll Working? What is IR35? What are the tax rules for Off-Payroll Working or IR35? How do you check your employment status? What is a personal service company?

Off-Payroll Working: PSCs & Public Sector Engagers
The 'Off-Payroll Working' rules move IR35: the responsibility to assess a worker's employment status and to deduct Pay-As-You-Earn (PAYE) and National Insurance Contributions (NICs) from a worker's fees, away from the worker's company to the End-Client in the labour supply chain.

IR35: Kay Adams v Lorraine Kelly v Christa Ackroyd v Eamonn Holmes
What was the difference between the facts and circumstances of the recent IR35 decisions on radio and TV hosts, Kay Adams, Lorraine Kelly, Christa Ackroyd and Eamonn Holmes?

External links

Basic Broadcasting Limited v HMRC [2022] TC08400

 


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