The Court of Appeal deems a radio host a disguised employee and orders another IR35 case to be reheard
The tax authority has won a £140,000 IR35 case involving Talksport presenter, Paul Hawksbee, at the Court of Appeal.
The radio show host was appealing a 2020 Upper Tribunal decision (reported on here) which had found that the work he had carried out for Talksport between 2012 and 2015 fell inside IR35.
The radio host, well known for the Hawskbee and Jacobs Show, which airs every weekday from 1pm to 4pm, provided his services to Talksport as a freelancer through his limited company, Kickabout Productions Limited (KPL).
Hawksbee appeal based on tribunal’s interpretation of MOO
In 2019, a First Tier Tribunal found in favour of Hawksbee. However, an appeal made by HMRC was then upheld by the Upper Tribunal a year later.
The presenter appealed on the grounds that the Upper Tribunal had “erred” on numerous issues including its interpretation of one of the key IR35 status tests, Mutuality of Obligation (MOO).
However, Court of Appeal judge Sir David Richards, rejected Hawksbee’s appeal stating that “Kickabout Productions’ submissions disclose no error of principle or approach by the Upper Tribunal.”
The judgment, published on 26 April, means Hawksbee owes HMRC £89,758 in income tax and £53,368 in national insurance contributions.
Judge also instructs Kaye Adams IR35 case to be reheard
On the same day, Richards also granted the tax authority an appeal of a judgment made in favour of BBC presenter, Kaye Adams, whose IR35 case carries around £124,000 in tax liability.
The Court of Appeal partially accepted HMRC’s appeal and instructed for it to be reheard at tribunal stage in due course.
The case relates to work carried out by Adams for the BBC via her limited company Atholl House Productions between 2013 and 2017.
Last year, the Upper Tribunal deemed Adams a genuine contractor (reported on here), stating that her contracts fell outside IR35 – this is despite the BBC exercising a high level of editorial control.
On delivering a judgment on Adams’ case, Richards said: “The Upper Tribunal largely failed to take into account many features of the contractual terms and their effects, some of which may be seen as pointing to an employment relationship, while others may be seen as consistent with Ms Adams being an independent contractor.”
Courts find it ‘impossible’ to decipher which test to use
Responding to both judgments, Rebecca Seeley Harris, employment status and IR35 legal expert, said: “In Atholl, the Court of Appeal have asked the tribunals to remake the decision based on their fresh guidance but, whether the UT decision stands or it is reverted back to the FTT is under question. So, we have to wait for the decision to be remade, which I hope is expedited.
“[…] I think yet again the main point from these cases is that the courts find it impossible to decipher which tests are supposed to be used and how they should be applied.
“Under IR35, this has to be decided under a ‘hypothetical contract’ whereas under employment status generally, the rules are different. How businesses are supposed to deal with this on a daily basis is beyond me.”
Cases highlight importance of fine details
Matt Fryer, head of legal services at Brookson Legal, echoed Harris’s views, adding that the tests developed in case law demonstrate how a “holistic view” of an IR35 engagement should be taken, which the Court of Appeal is keen to stress.
He said: “While these cases have not changed the tests which must be applied, they have emphasised the importance of understanding the detail of an engagement and also wider factors surrounding the contractor’s limited company.”
According to Fryer, it is “vital” end-hirers ensure they have the correct person in the organisation completing the employment status assessments.
“Gathering extra information from the contractor can help with the assessments,” he added.
“Information on whether the contractor had its own independent client base, or whether it subcontracts elements of its service to other people at its own discretion can help demonstrate how the contractor is truly operating as a truly self-employed person and not a disguised employee.”