What directors need to know and understand about IR35
Sandwiched between the obsequious Jim White, a man who wouldn’t report the date unless he could exclusively confirm he’d been told it by one of his numerous, highly-placed sources and rabble rouser Adrian Durham, ringmaster of the Drivetime circus, they provide an oasis of measured calm, humour and genuine interest in guests.
So it was intriguing to note that Hawksbee is the latest, and he’d probably irk at the term celebrity, to be pursued by the HMRC regarding his employment status.
The tax authorities sought to reclaim nearly £140,000 in unpaid PAYE and National Insurance Contributions from 2012 to 2015 in a challenge to his IR35 private contractor status.
A tribunal heard that Mr Hawksbee’s position was that, although he was paid by Talksport through his own company, Kickabout Productions Limited (KPL), he was not officially employed as a presenter although he was required to provide a minimum number of days per year presenting the programme from 1-4pm weekdays.
He was paid a per-programme fee and this had been the arrangement since he began presenting the show since 2000. HMRC contested that this longevity was an indication of the stability of employment and his continued presence in the schedule, the longest running show on the network, made him “part and parcel” of the Talksport organisation.
The tribunal dismissed these claims acknowledging that he was not subject to appraisals or disciplinary procedures, nor any other basic contractual rights such as paid holidays, sick pay or paternity leave.
Mr Hawksbee maintained that his profession was as an independent comedy writer and during the four years in question, he had written for the BBC and wrote 151 episodes of the award-winning Harry Hill’s TV Burp for ITV.
Talksport provided 90% of Hawksbee’s total income which the HMRC argued was key but the tribunal found that the opportunity cost resulted in a financial risk for Hawksbee acknowledging that he has turned down work, including Taskmaster for the Dave channel, as it clashed with his presenting responsibilities.
The tribunal said that HMRC had a flawed interpretation of mutuality of obligation (MOO) and they hadn’t proved this to a sufficient degree to indicate employment. Although it was agreed that Talksport held control over the “where” and “when” concerning the nature of his work, he had “an extremely high degree of autonomy” with the judge concluding “editorial and artistic control of the content and format lay almost entirely with Mr Hawksbee” which is certainly noticeable by listeners on a station as formulaic and repetitive as Talksport.
Although synonymous with the show, tribunal presiding Judge Scott said that this did not make him “part and parcel” with the station and concluded that “the relationship in this case was not one of employment.”
This is the third high-profile case that has gone against HMRC recently since Lorraine Kelly proved that she was a “brand” instead of an ITV employee and ‘Loose Women’ presenter Kaye Adams, who presents a show on BBC Radio Scotland, successfully proved that she was a freelancer rather than a BBC employee.
Chris Leslie, Director of Tax Networks Ltd, notes that the editorial control element is key in this judgement. He references another HMRC case, successful this time, against BBC Look North in Yorkshire presenter Christa Ackroyd who faced an unpaid tax bill of £420,000 due to being paid through an IR35 scheme.
Why IR35 is critically important
He said: “While Ackroyd’s case was dismissed mainly on the grounds of lack of editorial control, Kickabout’s appeal was upheld after the tribunal found as fact that (Hawksbee) was afforded an extremely high degree of autonomy by the radio station.
“Ultimately the HMRC have to realise that they are not the authority on IR35 and are taking on and losing expensive cases. They’re wasting public money and causing decent taxpayers to go through duress at having significant downtime and soul-searching.
“This must stop because IR35 is unworkable. Off-Payroll working as a perceived tax generator is becoming an expensive failure in front of judges – full stop.”
There’s no doubt that HMRC will continue to crack-down on what it sees as opaque and misleading employment statuses and if successful, defendants could find themselves looking at settlements that could easily instigate a company liquidation.
As well as being insolvency experts, who are able to assist if you have a tax bill your company owes but simply can’t afford to pay, we work with tax specialists who will be able to go through your case in detail, suggest the best strategies to follow and determine whether you have a chance at appeal – especially if you aren’t your own brand.