News of “BBC presenters defeated by HMRC in IR35 tax tribunal” is getting around nowadays which is expected to impact the broadcasting industry. All three of the presenters named David Eaves, Joanna Gosling & Tim Wilcox who have signed various contracts with BBC have failed in their appeal against an accumulative tax bill of £300,000 issued by HMRC and all presenters are considered by the tribunal within the scope of IR35. However, HMRC’s full recovery of the tax bill is not possible.
The case has taken eight years to reach the first tier tribunal (FTT), nine days to be heard in May 2018, and sixteen months for the case report to be published. BBC presenters failed to convince the two tribunal judges over their IR35 status and later the decision has been taken on the basis of casting vote of Judge “Harriet Morgan” who came to a conclusion that “Sufficient mutuality & at least a sufficient framework of control to place the assumed relationships between BBC & the presenters in the employment field.”
IR35 tribunal dismisses HMRC claim on issue of presenters carelessness
IR35 tribunal dismisses HMRC claim about BBC presenters & their accountants being careless in tax affairs & found that not only presenters but also their accountants or advisors acted in a good faith in response to the claims made by HMRC.
BBC presenters also released a statement saying –“We are both pleased & relieved to say that the tribunal has also found that we acted in good faith dismissing HMRC claims that we or our accountants were careless about our tax affairs in any way. As a result, the tribunal ruled that HMRC could not pursue its tax demands for a number of the years in question. We are delighted that our accountants were also deemed to have acted in good faith throughout. Given some of these findings, we are considering with our legal advisors whether to appeal. We have endured 8 years of HMRC investigation and eventual determinations to reach this point on what is clearly a difficult & unclear subject even for Judges. It has been a depressing and stressful period for each of us”.
As per CEO of Contractor Calculator “Dave Chaplin” – The dismissal of HMRC claim about presenters carelessness by IR35 tribunal prove to be a valuable lesson for contactor clients. “HMRC failing to prove the carelessness of BBC presenters” is considered as one of the positive aspects for BBC presenters as now HMRC can only claim sum for four years not for six. Under off-payroll regime, this case is a reminder for all firms who are currently hiring contractors.
Further close examination of BBC hiring practices
The decision taken by IR35 tribunal may result in further close examination of BBC hiring practices. The emergence of Christa Ackroyd IR35 ruling in the month of February 2018 revealed that BBC insisted the presenter to enter into a personal service company. She lost her case against the excess tax bill of £400,000 to HMRC. However, later the appeal was made to upper tribunal and the decision is still awaited on the same.
According to the latest case, Tribunal acknowledged that there is no choice left with BBC presenters regardless of providing their services via limited companies. It’s the responsibility of BBC to warn their presenters regarding IR35 risks. BBC forces their presenters to work on contractual basis via Public Service Company and to accept pay reductions too.
As you know, there are many presenters who have been unaware of IR35 risks and it is the responsibility of BBC to make them aware about IR35 off roll pay rules. However, BBC should also share the blame. He added that you can only feel sympathy for the affected presenters instead of helping them.
Dave Chaplin also added that the contracts signed by the presenters should also be drafted with much more clarity and it must show their real intentions of being self-employed.
Decision against BBC presenters may put other presenters in Confusion
In the month of October 2016, Contractor Calculator revealed that HMRC targeted 100’s of BBC presenters who provide their services through Public Service Company. HMRC even issued tax bills to many of the presenters to contest their liability.
The three presenters naming Gosling, Eaves & Wilcox were the first three names who contested their liability in Tribunal against HMRC for which the claim has been accumulated in back years. These tribunal proceedings run over weeks in the month of May 2018 for which the decision is out now.
Chaplin said that appeals made by BBC presenters against HMRC can’t produce happy outcome every time as we have seen in this case. Other BBC presenters appealing against HMRC may find similarities with the recent case of Eaves, Wilcox and Gosling and it may help them in taking decision that whether is it right to challenge HMRC in relation to IR35 off pay rules.
What does BBC think?
After the judgment, one of the BBC spokesperson said that we want to help the presenters in resolving past tax issues because of which HMRC are accessing their employment status now. We are reviewing the tribunal judgment and will try to help our each and every presenter in resolving these past tax issues.
Many years ago, we introduced a policy of engaging some freelance presenters via Public Service Company and they were understood to be self-employed. We understand that peoples are facing challenges and stress over IR35 tax issues. We are already in the process of setting principles in such a way that help presenters and should be fair to the individuals, HMRC & license fee payers.
The recent hearing has a deep impact on various presenters working across the media industry and further increases the confusion over the tax system for the individuals working in Broadcasting. It’s important that HMRC should provide more clarity regarding IR35 off payroll regime so that no more presenters have to go through this phase.