The tax office recorded a rare victory in an IR35 Tribunal when it was decided last week that three presenters engaged by the BBC belonged inside IR35, albeit under unusual circumstances.
The case, which took eight years to reach its conclusion, was resolved by a casting vote after the judges couldn’t agree on an outcome. Despite the court finding in favour of HMRC, the Treasury was unable to recoup the £920k it was demanding from Joanna Gosling, David Eades and Tim Willcox, given it was decided they were made to work as contractors due to the BBC’s “imbalance of bargaining power.”
As a result, the figure settled on is apparently in the region of £200k. After expressing “regret” with regards to the “stress this has put people under”, the BBC is reportedly considering paying this sum on behalf of the contractors.
In reaction to the news, Seb Maley, CEO of IR35 specialist, Qdos, said the “onus should be on the engager to settle, not the presenters, who it’s very difficult to label as guilty.”
When focusing on the reported 100 other BBC presenters who have also had their IR35 status challenged by HMRC, Maley said “we could see similar verdicts in time”, but also made it clear that “each case needs to be examined on its own.”
Maley was, however, quick to reassure contractors, explaining that the BBC situation is rare and independent workers “who have set or had their status set with care, do not need to panic.”
As is often the case in the aftermath of an IR35 case, HMRC received widespread criticism from other experts, including IPSE, who blasted the tax office for taking the best part of a decade to reach a decision. The trade body’s Deputy Director of Policy, Andy Chamberlain, said: “That this case has taken eight years and ended with an uncertain split decision shows how confusing and unfit for purpose IR35 is.”
Following the news of the Tribunal verdict, the tax office has also been advised to reconsider the way it views limited company contractors, with FCSA’s CEO, Julia Kermode, disputing “that PSCs are a mechanism to avoid tax; they are a perfectly legitimate way of someone being in business on their own account.”
As the private sector readies itself for the arrival of IR35 reform next April, which will see medium and large companies tasked with administering contractors’ tax status, businesses have been urged to take the changes seriously to prevent a repeat scenario.
Seb Maley of Qdos issued sound advice to these companies, stating: “No firm should force individuals into a working arrangement purely for its own benefit. IR35 status must be assessed fairly. In doing so, situations like this will be avoided.”