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Professional indemnity, along with public liability, is one of the key insurance covers that most UK limited company contractors will…
Presenter and journalist Adrian Chiles has reportedly won his IR35 appeal against HMRC, after undergoing years of protracted HMRC investigation and two tribunal hearings caused by Covid interruption. Chiles, who was operating through his media company Basic Broadcasting Ltd (BBL), appealed a decision made relating to services provided to the BBC and ITV. The full judgment has yet to be published but read on for an overview of what we know so far.
HMRC sought 5 years of income tax and NIC from Chiles
Adrian Chiles commenced working for the BBC as a journalist in 1992. In 1996, the BBC required him to cease his employment in favour of providing his services through a Personal Service Company (PSC), like many others who were given the same ultimatum. Chiles, therefore, formed BBL for this very purpose.
Andy Vessey, Head of Tax at Kingsbridge commented that “during the period of appeal of 06.04.12 – 05.04.17, BBL had two contracts with ITV and three contracts with BBC. HMRC sought to assess income tax of £1,249,433 and NIC of £460,739”.
Ryan Dawson, IR35 Project Manager at Kingsbridge goes on to add “Chiles commenced working for the BBC as a journalist in 1992 but in 1996 the BBC required him to cease his employment in favour of providing his services through a PSC. Although the consequences and challenges are very different in nature, this highlights and evidences that where an engager is forcing its flexible resources to operate down a particular business model such as umbrella working (often purely to benefit the hirer), it can and likely will cause a consequence in the future”.
Chiles is the latest high-profile presenter to be targeted by HMRC in recent years, following the likes of Eamon Holmes, Paul Hawksbee and Lorraine Kelly. Just last year, former Sky Sports presenter Dave Clark lost his IR35 appeal.
What was found in the First-Tier Tribunal?
Vessey shared the below insight on Chiles’s First-Tier Tribunal:
- “The First-Tier Tribunal found there was sufficient mutuality of obligation (MOO) and a framework of control to potentially point towards a contract of employment. However, the tribunal did not consider that the extent of each of the broadcasters’ control was a compelling factor”.
- “Whilst Chiles had no right of substitution, the tribunal considered that this did not indicate that the contracts were outside of BBL’s established business activities”.
- “Chiles undertook significant research and BBL provided some equipment but HMRC argued that he was integral to the business of both broadcasters. The tribunal took a different view, ie. whilst he might have been integral to part of the programme, he was not integral to their organisations”.
Tribunal found that Chiles was in business of his own account
Ultimately, Chiles was found to be in business of his own account. Vessey shares that:
“Just as in the case of Atholl House, the most significant factor that persuaded the tribunal that the contracts fell ‘outside’ IR35 was that Chiles was in business on his own account, certainly for all non-BBC and ITV work that BBL undertook. Chiles worked for numerous other clients and was involved in commercial projects that were non-profitable. He also paid 15% of his income to his management company Avalon to further his career and reputation”.
This may not be the end of the road of IR35 enquiry for Chiles
Vessey goes on to say that Chiles’s good news may not last for long, “Whilst this is a good news story and, again, highlights the possibility of not falling foul of IR35 where a person can proffer a genuine business case, despite failing the three major tests of status, I fear the euphoria may be short-lived”.
“Just as in the Atholl House case, HMRC are likely to appeal and it must be remembered that a First-Tier Tribunal ruling does not set legal precedent”.
How can contractors protect themselves from an HMRC IR35 investigation?
Dawson adds that “engaging with limited company contractors compliantly outside of IR35 is entirely possible and manageable, when working with experts who can collaboratively mitigate risk”.
When contractors are checking their IR35 status, they should consider an IR35 tool for a comprehensive view of the strengths and weaknesses of their engagement. If you need to assess an IR35 status, whether you are working for a small or international client, or to show to your end client, one option you could consider is the Kingsbridge status tool.
The hybrid approach offers the best of both; a fully automated tool with manual intervention by our in-house IR35 team for any indeterminate results. The questions have been developed by Andy Vessey himself, to ascertain a comprehensive view of your IR35 status. Once your status has been assessed, you will get a full report of your engagement. You buy an assessment for just £50 plus VAT, or get unlimited use of the Tool with our IR35 Protect (premium) insurance. Find out more about our contractor IR35 solutions here.
