IR35: Big loss for Eamonn Holmes
Eamonn Holmes is the tenth broadcaster to face a grilling under the IR35 rules, as chronicled in our IR35 casebook, and the fourth of those individuals to lose at the first tier tribunal (FTT).
The case was heard in June 2018, but it has taken 20 months for the case report to be published. Why there has been such a long delay is quite a mystery. However, it does appear that all reference to the amount of income tax and NIC at stake has been stripped out of the case report, as has any mention of the level of fees paid for Holmes’ services.
The case concerned the application of IR35 to contracts between Holmes’ own personal service company 'Red, White and Green Ltd (RWG)' and ITV between 2011/12 to 2014/15.
Holmes has worked through RWG since April 2001, but during the years in question, he also used a different PSC: Holmes and Away Ltd.
The bulk of the evidence was taken from the wording of the contracts between RWG and ITV (there was no other intermediary), and notes of a meeting between ITV representatives and HMRC in 2015.
Variety of work
Holmes has been presenting ITV’s daytime programme This Morning since at least 2006. He also worked on other TV programmes during the period 2011 to 2015, including as a presenter of Sky News’ Sunrise morning show, which was also contracted through RWG. He had significant other income in the period from radio and print media assignments, most of which was accounted for as self-employed income rather than as income of RWG.
In his evidence, Holmes boasted about how he ‘controlled’ the This Morning show, and the FTT accepted that he had considerable autonomy over the way in which he presented on the live show. He was not required to attend production meetings or rehearsals.
However, Holmes accepted that ITV had the ultimate right of editorial control. The TV company decided who Holmes would interview on the show, ITV staff researched each interview and gave Holmes a brief, but he would sometimes do supplementary research.
Holmes had to abide by the OFCOM guidelines and not wear any branded clothing while presenting the show.
He was also subject to a number of restrictions in respect of his other activities. For example, he was not permitted to take on work from a third party which might conflict with rendering his services to ITV. There were also restrictions on his leisure activities and provisions relating to the state of his health.
Holmes accepted that ITV wanted his services. He was not permitted to provide a replacement. If he was ill it was for ITV to find someone else and RWG did not get paid for that other person’s services. The notes from the ITV and HMRC meeting confirmed that substitution was not permitted.
The TV company provided a car to take him from his home to the studio every day he was working on the show. If he had to do an outside broadcast the TV company would pay for hotel accommodation and a car, booked directly and paid for by ITV.
Mutuality of obligation
Under each contract between ITV and GRW, Holmes was required to work a minimum number of shows and would receive payment in full if a show was cancelled and could not be rescheduled. This was clear evidence that a mutuality of obligation was in place for both parties. Holmes was obliged to provide his services to ITV and the TV company was obliged to pay for his services in full, even if the show was cancelled.
Holmes’ representative argued that the other tests did not demonstrate an employee relationship, particularly as Holmes carried on many other journalistic activities in his own name as a sole-trader.
The FFT judge said the mutuality of obligation and the control issues together placed Holmes in the employment field rather than self-employment in his relationship with ITV. There were no strong self-employment indicators in the relationship between Holmes and ITV, although it was clear that he had a self-employed relationship with his other customers.
The FTT concluded that IR35 did apply to all the contracts between ITV and RGW in the tax years under investigation.
Commenting on the Eamonn Holmes case, Dave Chaplin, CEO of ContractorCalculator, said: “Had Holmes been investigated under the new off-payroll working rules, due to take effect in April 2020, he would not owe HMRC any money at all.
“It would be his deemed employer, in this case the broadcaster, that would be picking up a tax bill. But in this instance, because of the unfairness of the old IR35 rules, Holmes is now facing a tax bill for employment taxes that shouldn’t even be his responsibility. How is that fair?”