HMRC fails again at the fourth attempt, with contractor’s IR35 status “never in doubt”
TV presenter, Kaye Adams, has once again successfully appealed HMRC’s case against her at a First-Tier Tax Tribunal, which carried a reported £124,000 in IR35 liability.
As reported by Contractor Calculator and the national press, this is the fourth time she has defended herself against HMRC’s claims, almost a decade since the tax authority began its investigation. The ruling was made last week (Thursday 29 November) by tribunal Judge Tony Beare.
Ms Adams, best known for ITV’s Loose Women as well as her work for the BBC, said she was “delighted that the First Tier Tribunal has confirmed my self-employed status for the third time”.
The ruling, for now, marks the end of a protracted case, though HMRC has 56 days – until Wednesday 24 January – to appeal.
The Adams case history
HMRC first opened inquiries into Ms Adams’s tax affairs in 2014, alleging she should have been inside IR35 in her engagements with BBC from 2013/14 to 2016/17.
Adams succeeded against this claim at a First-Tier Tax Tribunal, held in 2019. However, HMRC appealed that ruling, with the case heard at an Upper-Tier Tribunal in 2021. The original ruling – in Ms Adams’s favour – was upheld.
HMRC appealed again, and the case was heard a third time at the Court of Appeal in 2022. The Court found in favour of the tax office, referring the case back to the First-Tier Tribunal, to be held in November 2023, where Ms Adams was once again successful.
HMRC’s targeting tactics
As is relatively common in broadcasting, contractors tend to operate via an intermediary. Usually, this is a limited company, but other structures, such as partnerships, are also used.
This has been an area of keen focus for HMRC. Ms Adams is just one of many professional broadcasters targeted by HMRC for alleged IR35 non-compliance.
Other broadcasting professionals – including Gary Lineker, Eamonn Holmes, and former sports professionals engaged by Sky Sports – have also been subject to protracted and expensive litigation processes.
Despite HMRC’s persistence in targeting the profession, the tax authority does not have a consistent track record when taking these cases to tribunals. Earlier in the year, Lineker won his case, though Eamonn Holmes lost his.
“Never in doubt”
While HMRC has seen mixed success, Dave Chaplin – CEO of IR35 Shield – said that, in the Adams case, the result was “never in doubt”.
Chaplin had been “supporting Ms Adams on her case” since January 2019, including having “assisted at all four hearings”, according to Contractor Calculator.
Quoted in the publication, Chaplin said: “In my view, it was never in doubt that Ms Adams operated in business on her own account and was not an employee of the BBC.
“Multiple judges have told HMRC in multiple hearings that they are wrong, which should hopefully now be the end of the matter”, Chaplin concluded.
Despite the positive result and her “delight”, Ms Adams told Contractor Calculator: “There is no jubilation for me in this result”.
“Over the nine years of this investigation, the mental stress has been close to unbearable at times, and the legal costs I have incurred far outweigh the tax at stake”, Ms Adams said.
Excellent news. Asking businesses to pay income tax and national insurance on their full business revenue instead of staff salaries will kill many businesses.
HMRC should surely have to pay defendants’ legal costs if they lose the case. If not, there is no consequence for them in pursuing speculative cases, causing people like Ms Adams to incur huge costs and to bear mental stresses for defend their position over a protracted period of time. It is grossly unfair to treat micro-business owners like criminals in this way. It is also unfair to expect micro-business owners to pay the same tax as an employed person. Employed people receive training, workwear, paid holidays and sometime sick pay. Micro-business owners receive none of this, without paying for it themselves. Micro-business owners also incur the costs of sales & marketing and accountancy, and must plan for periods of low or zero revenue. IR35 should be scrapped!