A former BBC presenter has been defeated by HMRC in the first IR35 tribunal hearing in seven years. Christa Ackroyd presented BBC Yorkshire’s Look North local news programme until 2013, working through her limited company Christa Ackroyd Media Ltd (CAM). HMRC challenged Ms Ackroyd’s employment status as part of a high profile investigation into the IR35 status of several BBC presenters, CAM’s appeal is the first of these cases to reach the First Tier Tribunal (FTT).
The FTT panel found in favour of HMRC on the grounds that if the contract had been directly between the BBC and Ms Ackroyd then it would have been an employment contract, rather than for self-employment. In the ruling the tribunal highlighted several key factors that led it to the decision. A contract term of seven years, with a requirement for “first call” on Ms Ackroyd’s services for 255 days per year, equated to a full time role, the panel suggested. This was reinforced by the fact that the BBC would make regular payments to CAM regardless of the days worked in the period.
Another contractual term prevented CAM from offering services to other broadcasters, or Ms Ackroyd writing for non-BBC publications, without the BBC’s permission. This, the tribunal said, restricted CAM’s ability to trade commercially. CAM was also unable to provide a substitute for Ms Ackroyd, although, in contrast to HMRC’s recent approach, the FTT did not lend much weight to this, accepting that because she was “on camera” talent for a TV show substitution would not be practical.
Having lost her appeal Ms Ackroyd now faces a bill for Income Tax and National Insurance that would have been due if she had been taxed as an employee. Many reports, including in national newspaper are citing a figure of nearly £420,000, however the judgement suggests that after taking into account Corporation Tax paid by CAM and Dividend Tax paid by Ms Ackroyd, the figure will in fact be closer to £207,000. For many contractors this case and its outcome will underline the importance of keeping a relationship with their clients that marks them out as self-employed, in practice rather than just on paper. IR35 expert Dave Chaplin makes this point on his Contractor Calculator website: “lip service from an end client, or assurances from anybody other than a legal IR35 expert, won’t be enough to guarantee safety from IR35,” he wrote.
Other commentators have noted that the ruling provides an argument against the government’s planned changes to IR35. Andy Chamberlain, deputy director of policy and external affairs at IPSE is one of them. This opinion is based on the fact that the appeal concerned a contract from before the new public sector IR35 rules came into force in April 2017, and was therefore judged on the old rules, which still apply to the private sector. “It’s the first IR35 ruling for seven years, it has resulted in an extremely large tax bill for an individual, and it shows that the original IR35 legislation, deeply flawed though it is, can be made to work when HMRC actually enforce it,” Chamberlain said. On this reading HMRC’s win, whilst painful for Christa Ackroyd could be a shot in the arm for private sector contractors.