This month’s Chartered Accountants Tax Case Digest examines another First Tier Tribunal (“FTT”) case which dealt with the intermediaries legislation (IR35) in the context of broadcasting services. In this case, from 2018, HMRC was able to successfully argue that the legislation applied meaning the individual was an employee.

In previous months, we’ve examined two cases where HMRC’s IR35 arguments were not successful. The FTT’s decision here hinged on the level of control exerted by the broadcaster and the length and features of the relevant contracts.

The appeal in this case was heard by the Upper Tribunal in recent months – the relevant decision has not yet been released and is awaited with interest. Next month we’ll be covering another IR35 Tribunal decision featuring broadcasting services.

Background

Christa Ackroyd is a television journalist who has been engaged in a variety of media roles since the 1970’s. In 2001 she began to present “Look North” on BBC1 and continued to do until 2013.

Ms Ackroyd worked at the BBC as a result of two fixed term contracts between the BBC and the appellant, Christa Ackroyd Media Ltd (“CAM Ltd”), a personal service company. The first contract was dated 2001 and was followed by a later contract in 2006 which was terminated in 2013. The contracts required CAM to provide the services of Christa Ackroyd for up to 225 days per year.

HMRC issued determinations to CAM Ltd in respect of PAYE and Class 1 national insurance on the basis that the intermediaries legislation (IR 35) applied. The appeal covered the tax years 2008/09 to 2012/13 inclusive and totalled almost £420,000.

Ms Ackroyd contended that the liability was £207,000 in total if the appeal was not successful. However the FTT did not consider the question of quantum as part of its deliberations.

HMRC made the determinations and decisions on the basis that the hypothetical contract between the BBC and Ms Ackroyd would have been a contract of service rather than a contract for services contending that Ms Ackroyd’s status was that of an employee and that CAM Ltd should therefore account for PAYE and NIC accordingly.

Ms Ackroyd contended that her status is that of a self-employed contractor meaning there is no further liability on the part of CAM Ltd.

Ms Ackroyd did not accept that the BBC had any control over her as a presenter, either in terms of the continuing changes she introduced to Look North or in relation to editorial matters. She considered that she had “day to day editorial control”, whilst accepting that the BBC had “editorial responsibility”.

Decision

The FTT did not accept that Ms Ackroyd did have day to day editorial control over her work as that would have been inconsistent with clause 5 of the relevant contract. Overall, the FTT found that Ms Ackroyd, based on the evidence provided, could not fairly be described as being in business on her own account.

She was economically dependent on the hypothetical contract with the BBC which took up most, if not all, of her time. A hypothetical contract of that length for at least 225 days per year and terminable only for a material breach pointed towards a contract of employment.

The existence of a seven year contract meant that her work at the BBC was pursuant to a highly stable, regular and continuous arrangement which involved a high degree of continuity rather than a succession of short term engagements. This pointed towards an employment contract.

The FTT also found that the hypothetical contract would have been a contract of employment as:

• the BBC ultimately had the right to specify what services CAM Ltd would provide;
• the BBC had control over content, given its editorial responsibility (despite Ms Ackroyd’s ability to ad lib in a live news environment);
• there was mutuality of obligation: Ms Ackroyd was contractually obliged to perform the services and the BBC was contractually obliged to pay fees to CAM Ltd on a monthly basis;
• CAM Ltd had to provide MS Ackroyd and could not provide a substitute; and
• Ms Ackroyd’s contract prevented her from providing services to other organisations in the UK without the BBC’s consent.

Overall, the FTT concluded that making a qualitative assessment of the facts it considered she was an employee under a hypothetical contract. If the services provided by Ms Ackroyd had been provided under a contract directly between the BBC and Ms Ackroyd, then she would have been regarded for income tax purposes as an employee of the BBC.

The appeal was dismissed.

The full judgment in this case is available from: - http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j10300/TC06334.pdf