fbpx

IR35: HMRC and the BBC

Julie Duane, Legal Counsel at CG Professional.

From April 2020 the private sector will face greater challenges in terms of IR35. Although this comes with its own complexities what has become prevalent is that HMRC are looking to crack down on this, as evidenced by the action against Tim Wilcox, Joanne Gosling and David Eaves. These were three individual freelancers using personal service companies to the BBC in order to avoid certain taxes. This article seeks to summarise the case pursued by the HMRC against them.

Overview

The HMRC have recently announced their success against three BBC presenters who will be required to pay approximately £920,000 collectively in terms of unpaid taxes.

The Court held that “the BBC was in a unique position and used it to force presenters into contracting to personal service companies and accept reductions in pay”. Whilst the Court acknowledged the parties had been forced into the wrong contract, this did not absolve them from their IR35 requirements. Although the individuals argued they were self-employed the Court ruled that because there was mutuality of obligation and a level of control whereby, they were told what to do, where to do it and when to work, that they assumed relationships which pointed to employment.

It was also noted that following this judgment there is approximately 100 other BBC presenters who could be subject to similar penalties, albeit that each of these cases will need to be examined on their own merits. It is also noted that the BBC has assumed some responsibility as a result of this and advised that they will be settling around £200,000 in respect of the employer’s National Insurance bills. It is therefore imperative that organisations are obtaining advice on IR35 and its requirements in advance of the deadline of April 2020 to ensure that they do not fall foul to similar judgments.

If you have any questions regarding the content of this article, please do not hesitate to contact a member of the CG Team who will be more than happy to assist.