Understanding IR35
With IR35 cases hitting the headlines of late we thought we’d invite Oscar Fairchild sister company – and employment compliance expert – Sullivan White to take a closer look at two of the most high profile, and highlight the key learnings SMEs can take away.
Radio presenter loses IR35 case
The Court of Appeal has dismissed a radio presenter’s argument that IR35 didn’t apply to his engagements with TalkSPORT. Why?
The presenter engaged with TalkSPORT via a limited company. HMRC raised assessments totalling £143,000 for income tax and NI on the basis that it was caught by IR35. The First-tier Tribunal sided with the presenter, but this was overturned at the Upper Tribunal, and now the Court of Appeal has also dismissed his appeal. The Court found that there was mutuality of obligation because Kickabout Productions Limited required TalkSPORT to offer the presenter airtime for at least 222 days per year. The contract also gave TalkSPORT the right to suspend the presenter, which is consistent with a contract of employment. The Court also confirmed that an absence of workers’ rights in the contract did not carry much weight in determining the employment status because, if there was an employment relationship, he would enjoy the rights conferred by law on employees.
This case again shows the importance of analysing the details of each specific case before assuming the employment status of a particular engagement.
Court of Appeal rules in contractors’ favour
A TV presenter won a high-profile Upper Tribunal case regarding her employment status under the IR35 rules. HMRC appealed against this, but the Court of Appeal has just rejected its argument. What happened?
HMRC’s argument was that the Upper Tribunal had interpreted a key piece of case law incorrectly. The case in question sets out the factors that should be considered, such as mutuality of obligation, personal service and others. HMRC argued that whether someone is “in business on their own account” (i.e. other factors) should be given little weight, and even argued that considering this would be an onerous compliance burden for HMRC. In a decision published today, the Court of Appeal unanimously rejected this argument, stating that circumstances known to both parties at the date of the contract, e.g. the fact that the person providing the work has an established career as a freelance worker, should be taken into account. This is a huge win for all contractors, particularly those providing personal services.
The decision on whether, overall, there would have existed an employment relationship in this case was remitted back to the Upper Tribunal.
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About Oscar Fairchild: Oscar Fairchild is an ACCA chartered and certified and AAT qualified accountancy, financial consultancy & bookkeeping practice with offices in The City of London, and Billericay, Essex. Offering a wide range of services including Self-Assessment Services, Annual Returns, VAT Returns, Credit Control, Payroll, Auto Enrolment Pension and Management Account services to high growth businesses and licensed London taxi drivers across London, Essex and Hertfordshire.
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