Watch out, HMRC is about again. This time they have the BBC in their firing line; namely, three BBC journalists: Joanna Gosling, David Eades and Tim Willcox. So what was HMRC’s beef with them? Did they do an undercover exposè on their Christmas Party? Did they write a scathing article about workplace fashion? No no, unfortunately nothing as salacious as that, it’s only our old pal IR35 again.
It’s not the first time HMRC have tried to go after TV presenters. It’s like they had a bad experience on a daytime chat show and are hell-bent on revenge. Back in April of this year they went after Loose Women TV and radio broadcaster Kay Adams and even tried to go after our wee Lorraine over a £1.2m tax bill. Both times, HMRC were defeated in court which makes this recent ruling against the three unlucky presenters all the more shocking.
For those of you who may have (understandably) nodded off during IR35 class, here’s the Cliff Notes. There has been a recent overhaul and the relationship between employers and independent contractors (or personal service companies) has been redefined within the parameters of IR35 to fall more in line with traditional employer/employee relationships. This is meant to stop people skipping on their tax obligations.
Now, there definitely were some scurrilous folks out there who were abusing these loopholes to not pay as much tax and this led to the reforms being introduced. But what is becoming apparent is that big companies in particular are vulnerable to such tribunals due to the large number of employees they have, both employed directly and as contractors.
Well, the old adage of “innocent until proven guilty” doesn’t really seem to apply to these IR35 investigations and HMRC are rather like a bull in a china shop and god help anyone who is in their way. Because the worst thing about this case is the presenters in question claimed they didn’t even know what IR35 was until it came up when they were being investigated.
According to the tribunal’s findings, they acknowledged that the BBC had left the presenters with no choice but to provide their services via limited companies and had failed to warn them of the risks of IR35. The judgment even noted “the BBC were in a unique position and used it to force the presenters into contracting through the PSCs and accept reductions in pay”. Scathing.
So, how come others won their tribunal cases but the book was thrown at these three presenters? The total amount to be paid back by all three equalled £92,000. Apparently hundreds of BBC presenters who provided their services via a PSC were being targeted in a mass clampdown. But how many of those investigated were actually trying to pull the wool over HMRC’s eyes and who were genuinely acting in good faith on the advice of their employers or accountants?
The simple answer is: who knows? This tribunal result shows that anything can happen and should make people perk up a bit. And it’s not just limited to the broadcasting industry as demonstrated by a similar clampdown of GSK only a couple of weeks ago. If you employ any sort of independent contractor, it’s time to review them and make sure they are compliant with the new guidelines.
The only thing we’re certain of is that there will be a lot of uncertainty in the coming months (possibly years) as the dust kicked up by these reforms settles. Where will you be when the taxman comes a’knocking?