The IR35 personal service company legislation has been on the statute book since 2000 and has never really worked as intended.
The main reason for this is that the interpretation of the legislation is based on the same employment status tests referred to above, which lack clarity and are open to interpretation by the courts.
However, HMRC have recently won a key case on IR35 at the First Tier Tribunal concerning the BBC presenter Christa Ackroyd.
Ms Ackroyd had been supplying her services to BBC through her personal service company Christa Ackroyd Media Services Ltd since 2006/07. The Tribunal agreed with HMRC that the hypothetical contract between the BBC and Ms Ackroyd would have been a contract of service. The existence of a seven-year contract meant that Ms Ackroyd’s work at the BBC was pursuant to a highly stable, regular and continuous arrangement. It involved a high degree of continuity rather than a succession of short term engagements. That is a pointer towards an employment contract.
Another key factor considered by the court was that her fellow presenter on “Look North” was on the BBC payroll. Ms Ackroyd’s company was appealing against demands for some £419,151 from HMRC relating to income tax and National Insurance contributions (NICs) for the tax years 2006/07 to 2012/13. It will be interesting to see if there is an appeal to a higher court and whether this decision will be used by HMRC against other BBC presenters and other personal service companies.
Please contact us if you wish to discuss whether or not the employment status or IR35 rules impact on your working arrangements.
