HMRC appeal against Scottish broadcaster and presenter Ms Kaye Adams (the presenter of ITV’s show “Loose Women”) has recently been dismissed by the Upper Tribunal and upheld the 2019 decision of the First-Tier Tribunal resulting in the winning of Kaye Adams in the IR35 case.
Kaye Adams, who was in a long-term contract with the BBC and was presenting a radio show, has provided her services to the BBC through her Personal Service Company (PSC) named “Atholl House productions Limited” in the tax years 2015/16 and 2016/17. HMRC sent a tax bill of £124,000 asking her PSC to pay £81,000 as income tax and £43,000 as National Insurance contribution. HMRC claimed that she was a BBC employee and subject to IR35 legislation. Kaye Adams appealed against HMRC in the First-TierTribunal, and the judgement was announced in her favour. HMRC further made an appeal against Kaye Adams in the Upper Tribunal.
As per HMRC’s view, the arrangements fall under the IR35 regime, and even though Adams was not considered a BBC employee, the fee received by the company from the BBC was to be treated as employment income. The company must pay tax under the PAYE system as well as National Insurance Contributions (NIC). However, the Upper Tribunal dismissed the appeal made by HMRC and upheld the decision given First-Tier Tribunal. HMRC said that they are disappointed by the Upper Tribunal’s decision that IR35 rules do not apply in this case.
IR35 experts say that this case went through both the First-Tier Tribunal and Upper Tribunal, somewhat going in favour of HMRC at the initial stages, but finally, the appeal has failed as there were facts that were not in their favour.
CEO of Contractor Calculator “Dave Chaplin” said that the news of the dismissal of HMRC’s appeal by the Upper Tribunal should have increased the comfort level of other media-based freelancers. Kaye Adams was engaged in providing personal service, mutuality of obligation was satisfied, and there was a sufficient control of framework, but the grounds on which she was found outside IR35 is that “she was in business on her own account”. Dave also said that this would not be agreed upon by the contentious and flawed HMRC’s tool called CEST. It means that many contractors like Adams will fall outside IR35 because they are in business on their own account will be judged as inside IR35 by the clients giving no route to natural justice.
It was agreed that Adams provided a Personal Service, the element of mutuality of obligation (MOO) is satisfied, and only editorial control was held by BBC over the provision of services.
However, the Judges finally turned the case in favour of the BBC presenter Kaye Adams by saying that “the prima facie conclusion reached at the end of Stage 2 is to be displaced because, when entering into the hypothetical contracts here at issue, Ms Adams would have been entering into business on her own account”, and much of this was because of the fact that she worked on several projects simultaneously.
This is another case HMRC has lost in the Upper Tribunal since its infamous changes to IR35 in the public sector in 2017.