IR35 where are we now?

by | Mar 29, 2022

IR35, where are we now?    Following the recent Basic Broadcasting Ltd v HMRC IR35 case in this blog post ABG’s tax consultant, Tim Palmer, reviews the case and considers what we can learn from it.

Recently the TV presenter and broadcaster Adrian Chiles won his IR35 case against HMRC at the lower tier tax tribunal but where does this leave us now?

HMRC asserted that the IR35 rules applied to the contracts that Adrian Chiles had (via his company) with both ITV and BBC, under which he provided TV and radio Presentations between 2012 and 2017.

At the lower tier tribunal, it was held that he was not a ‘deemed employee’ of ITV or BBC for the fiscal years 2012/13 to 2016/17. HMRC had issued IR35 tax and NIC demands of approximately £1.7million for the above period.  HMRC argued that, without the protection of his company, he would have been a deemed employee of both BBC and ITV.

However, the judge held that he was ‘in business on his own account’. The factors that helped his company win, included:

He was somewhat of a ‘maverick’ and the majority of his shows were live, unscripted and he controlled his own content and delivery. He gave his own opinions, and chose, whilst live, the direction of the programme and his interviews.

He had many different clients. In the period 1996 to 2019, he contracted with over a 100 different third parties. His company’s clients were hiring a ‘brand name’.

Adrian hired his own personal assistant. He carried out unpaid activities to maintain and enlarge his own profile. He frequently wrote for several national newspapers.

He was hired to do many different types of programmes. He jointly hosted the topical news programme ‘The One Show’. He was also the main host on ITV’s football coverage. He wrote a book on following West Bromwich Albion FC.

He was very much in business in his own account. He paid 15% of his income, relating to every booking, to his management company Avalon, in a longstanding business relationship. They got all his bookings for him and advanced his career.

The judge added that Mr Chiles provided his own ‘tools of his trade, at his own expense’ to perform his TV contracts. He kept an office at his home with a desktop computer, computerised diary, broadband connection, and two mobile phones. He subscribed to multiple satellite TV sports channels, home and abroad, and many sports publications. He did similar research for his different other general news TV programmes.

He sometimes took on projects that did not bear fruit. There was indeed an element of financial risk.

Adrian Chiles’ lawyer, James Rivett, argued that ‘the terms of the contracts as a whole were inconsistent with a contract of employment.’

The judge concluded:-

‘Mr Chiles has entered into contracts for services and not contracts of employment. We conclude therefore that the condition in S.49(1)(c) ITEPA 2003 is not satisfied in relation to the ITV contracts or the BBC contracts in any of the relevant fiscal years’.

The judge held that Adrian Chiles was ‘in business on his own account’.

This IR35 case was dismissed and Basic Broadcasting Ltd, Adrian Chiles’ personal service company, won its appeal.

The evidence was indeed overwhelming and IR35 was not applicable and I wonder how this IR35 case got to the tribunal in the first place!

However, there is a lot to be learned from it. This is a ground breaking case for IR35. Good contracts are vital. However, the contract must tell the truth and represent the reality in practice.

This case demonstrates that personal service companies can still be safely engaged outside of IR35. The various factors that helped his company win, and proved that he was ‘in business on his own account’ should be looked at once more.

Accordingly, in the right circumstances, personal service companies can still be used for the appropriate engagements, despite the recent IR35 private sector reforms. 

Tim Palmer CTA ATT, Tax Consultant

Arram Berlyn Gardner

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