Susan Ball

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Susan Ball


IR35 and deemed employment hitting the headlines again

Last week three BBC presenters working through personal services company were unsuccessful in their attempt to overturn an HMRC decision that they should pay tax and national insurance as employees rather than self-employed contractors.

The decision involving Joanna Gosling, Tim Willcox and David Eades will have implications for other BBC stars and broadcast entertainers currently involved in IR35 disputes with the taxman. 

The case also highlights the difficulty in determining employment status for tax which will become increasingly important when new rules on off-payroll working come into force in April 2021.

Unlike another recent case involving Lorraine Kelly who was able to successfully argue that her relationship with ITV was not that of a deemed employee, the judge in this case determined that the overall picture of the relationship between the three presenters and the BBC was one of deemed employment meaning the IR35 rules applied. These rules are designed to ensure that individuals who ought to pay income tax and NIC as employees cannot use a corporate structure to reduce their liabilities.

One of the reasons was that the BBC had 'overall control over…the nature of the programme on which the Presenters worked, the overall running order and the format for its production and had ultimate editorial responsibility for the content of the programme'. The judgment also noted that the BBC was effectively able to prevent the presenters from working for any other broadcaster.

Control is an important factor and as this shows care is needed when defining the extent of any control over the individual by the engager, along with considering the other tests such as the right of substitution, any financial risk or opportunity for profit, and which party is to supply equipment, tools and transport.

This is because, following the Supreme Court decision in Autoclenz v Belcher [2011] UKSC 41, it was held that the true nature of a contract is what the parties have agreed, and this may not be reflected in the written contract. 

This case and others have shown that what is important is to consider the facts and working relationship. It also demonstrates how difficult it is for engagers to make correct status determinations under the off-payroll rules in the public sector which are due to be extended to the private sector in April 2021.

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