HMRC wins IR35 case against BBC presenter

HMRC has won a case against a BBC presenter who used a personal services company to work on a freelance basis.

BBC presenter Christa Ackroyd’s case is the first IR35 case since 2011. The case means Ackroyd’s personal services company will have to pay a tax bill of just under £420,000. The ruling centres around employment status. It deemed that the three main factors which determine IR35 status applied to the engagement:

• Personal service was required (there was no right to substitution)
• The BBC exercised significant control over the work performed by Ackroyd
• There were obligations on both parties (mutuality of obligation) to carry out work and make regular, monthly payments for that work.

In addition, Ackroyd could not seek work elsewhere without the express permission of the BBC.

Ackroyd told the tribunal that the limited company model was in place at the insistence of the BBC and that she had received assurances from her accountant that the arrangement was tax compliant. But these factors were deemed not relevant under the legislation.

Andy Chamberlain, Deputy Director Policy of the freelance body IPSE, said: “This case is significant for several reasons: it’s the first IR35 ruling for seven years, it has resulted in an extremely large tax bill for an individual and it shows that the original IR35 legislation, deeply flawed though it is, can be made to work when HMRC actually enforce it.

“The current drive to push all the liability onto the client from the outset is like using a sledgehammer to crack a nut. Last year’s change to the way IR35 works in the public sector has essentially stopped contracting in the sector altogether, robbing it of vital specialist skills and damaging public services. If the Government extends the reforms to the private sector, as it has signalled it wants to, it will damage not only our flexible labour market, but the UK economy as a whole.”

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