Eamonn Holmes vs HMRC on IR35: What’s happened so far?
The IR35 case around Eamonn Holmes started way back in 2018, and it doesn’t look set to end any time soon. Holmes, who was working through his personal service company (PSC) Red, White and Green, argued that he was a self-employed contractor. However, in early 2020 his IR35 case was published with the judge ruling with HMRC that he was inside IR35 as a ‘disguised employee’. The case details were announced in early March, around the same time of that the pandemic reared its head in the UK, so you’d be forgiven for letting this one pass you by.
Demonstrating that IR35 is not always clear-cut, some aspects of Holmes’ role were seen as firmly inside IR35, while other areas were outside. Here we’ll give you an overview of what has happened so far with this high-profile case, and why he was ultimately deemed inside IR35.
Why did Holmes lose the case?
The case looked at the three main status determinators: Right to Substitution, Mutuality of Obligation (MOO) and Control.
Right to Substitution
ITV wanted Holmes’ services specifically, so if he was unable to work (i.e. sickness), it was up to ITV to hire and pay for a replacement. Although this was seen as a minor factor in the case due to Holmes’s fame and draw as a brand, this still arguably points to an inside determination. Lorraine Kelly, another ITV presenter who has been embroiled in IR35, was able to use Personal Service (i.e. the Right to Substitution) as an argument for being outside IR35. This was due to the fact that Kelly was responsible to find a replacement for herself should she be unable to work, and for any instances of this, the replacement would be paid for directly by Kelly’s company.
Mutuality of Obligation
Mutuality of Obligation, often to referred to as MOO, looks at whether a contractor is required to consistently provide services to the client, or if they can decline work. Unfortunately for Holmes, this raised an alarm bell of being inside IR35. Continued service was specifically written into his contract, with it stating fixed dates which Holmes was expected to provide services to ITV. Holmes would also still get paid if a show was cancelled, again pointing to him inside IR35.
Holmes was not required to attend rehearsals or production meetings for This Morning, and the tribunal accepted that Holmes had autonomy over how he presented the show. However, the TV company picked who Holmes interviewed, and even gave Holmes a brief beforehand.
The minor IR35 status tests
Although the above three status tests are seen as the most important, contractors must not forget to overlook the minor statues, which can be the deciding factor when determining an IR35 status. In Holmes’ case, the most notable was that of employee perks. Whilst working for ITV, Holmes was provided with a car in which to travel to and from the studio, and if he had to travel somewhere else, ITV paid for accommodation and the car. For Holmes to truly be working outside IR35, these costs should have been paid by his PSC, Red, White and Green Ltd.
What is Holmes doing now?
Holmes maintains that “there is nobody more freelance than me” and is reportedly set to appeal the decision in an attempt to upturn the £250,000 tax bill. Holmes’ case is also by no means unique. Presenters Lorraine Kelly, Kaye Adams, and Paul Hawksbee (among others) have all been involved with IR35 disputes with HMRC in recent years.
TalkSPORT’s Paul Hawksbee initially won his First-Tier Tax Tribunal back in July 2019 but in June this year, following an appeal by HMRC, his status swung the other way. HMRC is also reported to be appealing the case of Loose Women star Kaye Adams, after she won her First-Tier Tribunal back in April 2019.
IR35 enquires can be long and drawn on
Clearly, due to the complexity of IR35, they aren’t clearly either in or out and the decision will ultimately come down to the judge on the day. “By their very nature, IR35 enquiries can last months and even years before finally having a resolution either directly with HMRC, through the tax tribunals or the courts”, says Ryan Dawson, IR35 Project Manager at Kingsbridge.
“The threat of IR35 enquiries will add a great amount of stress and unwanted anxiety on contractors that ultimately are continuing to run a legitimate business whilst the matter is ongoing”, he continues. “I think what these high-profile cases such as Eamonn Holmes highlights is that HMRC investigations can be so opaque and time-consuming due to a number of factors such as evidence gathering, appointing representation etc.”
“Contractors and indeed end clients/agencies can avoid much uncertainty and stress during enquiries by keeping and apply excellent, credible evidence once they review the status of a group or individual workers. All of which, can be done using solutions that companies like Kingsbridge provide. We as an IR35 team will naturally keep hold of all the available evidence regarding the working practices and where provided, we ensure that other evidence such as the contractual terms is water-tight where it legitimately can be.”
How can you check your IR35 status?
If we can take anything from the Holmes case, it’s that an IR35 case can be drawn out and become incredibly expensive. It’s no secret that the Government CEST tool has been heavily criticised, with HMRC even calling one contractor’s CEST result “irrelevant”. So, you may want to look at another option to check your IR35 status, to ensure that you have the correct status.
Our award-winning status tool combines a questionnaire with 29 to 34 questions, depending on the specifics of the contract, to ensure a complete picture of your assignment is built. Giving an instant result, any indeterminate results are passed over to our IR35 experts to review manually. Kingsbridge’s status tool costs just £50.00, get a status assessment now by clicking here.