In Red, White and Green v HMRC [2023] UKUT83, the Upper Tribunal (UT) concluded that the First Tier Tribunal (FTT) had acted properly in its approach to its decision that Eamonn Holmes was effectively employed by ITV. Without any error in law, the decision stood.

  • The appellant is the personal services company of TV personality, Eamonn Holmes, through which he provided his services to ITV as a presenter on This Morning.
  • HMRC issued determinations for the years 2011-12 to 2014-15 on the basis that the IR35 rules applied to this particular contract. Under IR35, the actual contract is replaced with a 'hypothetical contract' which would have existed had the individual, Eamonn Holmes, provided his services to the client, ITV, directly and not through an intermediary company. HMRC determined that the hypothetical contract was one of employment.
  • On appeal, the FTT agreed with HMRC and the appeal was dismissed.
  • Whilst the findings of fact decided upon by the FTT cannot be challenged, the appellant appealed the FTT's conclusion that these facts amounted to a contract of service (employment) and not a contract for services, (self-employment) between Mr Holmes and ITV.

The UT applied the three-stage process of determination as set out by the Court of Appeal (CoA) in HMRC v Atholl House Productions Ltd:

  • Stage 1: What are the actual contractual terms and relevant circumstances?
  • Stage 2: What would the terms of the hypothetical contract be?
  • Stage 3: Would the hypothetical contract be one of employment (determined by applying the approach set out in  Ready Mixed Concrete)?

Stage 3 requires Mutuality of Obligation, a sufficient degree of control by the client and any other provisions being consistent with a contract of employment.

On appeal, the appellant argued:

  • That too much weight was given by the FTT to editorial control, which represented control of 'how' the role was performed and not control of 'what' services were performed.
    • The UT cited Atholl again, where the CoA confirmed that whilst control of the 'what' was the 'most significant aspect of the test', the 'where or when' were not to be ignored.
  • Compliance with an industry regulator should not be evidence control.
  • The FTT found that 'Mr Holmes had considerable autonomy' and as such, it was clear ITV did not have sufficient control.
    • The UT was satisfied that the FTT had properly considered the question of control and on that basis, their conclusion could not be interfered with.
  • The FTT had erroneously referred to subsequently overruled case law and had presumed a contract of employment at the end of Stages 1 and 2 of the process.
    • The UT analysed all of the decisions and concluded that the FTT had undertaken a balanced assessment of all of the factors and correctly applied binding case law tests.
  • The FTT had disregarded a number of relevant factors, the most important of which was that Mr Holmes was in business on his own account.
    • The UT once again cited Atholl, where the CoA played down the importance of an individual being 'in business on their own account'. The conclusion of this and other binding case law is that whether an individual is in business on their own account can be misleading and detract from evaluating the hypothetical contract under consideration. Also, having a profession does not prevent an individual also holding an employment in the same field. Furthermore, the UT concluded that the FTT had specifically included other activities undertaken by Mr Holmes in its analysis.

Useful guides on this topic

Good Morning IR35:Eamonn Holmes loses employment status case
In Red, White and Green Limited v HMRC [2020] TC7603, the First Tier Tribunal (FTT) held that income received by Eamonn Holmes’ Personal Service Company was within IR35. If he had provided services directly to ITV it would have been a contract of employment.

Personal Service Company (PSC) tax
What is a PSC?  What are the tax implications for a PSC?   

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

External links

Red, White and Green v HMRC [2023] UKUT83

Red, White and Green Limited v HMRC [2020] TC7603 


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