IR35: Christa Ackroyd loses again
Ackroyd was the first IR35 case HMRC won involving BBC presenters. She has now lost her appeal at the upper tribunal that concentrated on the issue of control.
There have been five cases heard at first tier tribunal (FTT) involving seven TV or radio presenters: Christa Ackroyd, Lorraine Kelly, Kaye Adams, Paul Hawksbee, and Joanna Gosling, David Eades and Tim Willcox.
Christa Ackroyd appealed to the upper tribunal (UT) on the grounds that the FTT misinterpreted the law when it concluded that the BBC had sufficient control over her actions such that the relationship should be one of employee and employer.
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In 2001, Ackroyd was approached by the BBC to front its Look North programme as the viewing figures were lagging behind those of its ITV rival. At that time, Ackroyd was co-presenting a daily news digest programme for Yorkshire Television.
However, the BBC did not want to take on Ackroyd as an employee and suggested that she work through a personal service company. In response, Ackroyd set up Christa Ackroyd Media Ltd (CAM) and the contract with the BBC was signed on behalf of CAM in May 2001.
There was no agency involved in the chain, so there were only two written contracts to examine: between CAM and Ackroyd, and CAM and the BBC.
In order to determine whether a hypothetical contract between Ackroyd (the individual worker) and the BBC (the engager) would be one of service, as exists between an employee and employer, the FTT examined three broad conditions:
- Mutuality of obligation between the parties to provide and perform the work
- Control by the engager over the worker
- Whether indicators of self-employment existed
Mutuality of obligation
The FTT decided that there was a mutuality of obligation between the parties, and this point was not part of the appeal to the UT.
The FTT also concluded that the attributes of the hypothetical contract were largely consistent with an employed status for Ackroyd. This part of the decision was not appealed to the UT.
Control is key
The condition of right of control looks at whether the engager can determine where, when, and how a task is to be done. The FTT had to weigh up evidence regarding control over the different factors of Ackroyd’s work from the BBC programme editor, BBC editorial guidelines, the written contract with CAM, Ackroyd’s accountant and Ackroyd herself.
At the UT, Ackroyd’s barrister argued that it was wrong to insert control as an implied term into the hypothetical contract. Also that there was no framework of control for Ackroyd, such as a BBC line manager or appraisal system, and there were no effective sanctions which the BBC could apply to Ackroyd to enforce control.
The UT rejected these arguments, mainly based on Ackroyd’s evidence to the FTT.
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The FTT didn’t believe Ackroyd’s assertions that she had “day-to-day control” over her work and “led the team in the sense of control and decision-making”. The FTT refused to accept that Ackroyd had the final say on issues relating to Look North or her work on the programme. The FTT also concluded that the editor of Look North, on behalf of the BBC, had the ultimate right to decide what stories were covered and in what order.
Taking all of these aspects together and the fact that the contract between the BBC and CAM was for seven years, the UT concluded that the FTT did not make an error that the hypothetical contract contained sufficient control by the BBC over the provision of services by Ackroyd.
Commenting on the upper tribunal verdict Dave Chaplin, CEO of contractor resource site ContractorCalculator said: “What’s really frustrating about this case is that it was decided on the pre-reformed off-payroll rules. This means that the freelancer, in this case, Ackroyd, is deemed liable for employer’s national insurance which under the off-payroll rules would rightfully be paid by the BBC.
“Had Ackroyd’s status been assessed under these the new rules which have applied from April 2017 for public sector contracts such as with the BBC,” continued Chaplin, “she would not have an extra tax bill, and it would be the BBC picking up the bill for the perceived avoidance of the employment taxes.”
Seb Maley, CEO of Qdos, commented: “This case is not a typical IR35 case, given contractors aren’t usually pushed into working arrangements purely for the benefit of the client, despite the emerging trend in the banking sector.”
However, Maley noted that Ackroyd’s case “also reflects the complexities of the IR35 legislation and that making an IR35 decision without the help of a specialist is a risk, particularly when taking into account the cost of getting things wrong.”
Consulting tax editor for Accountingweb.co.uk. I also edit Bloomsbury's Tax Rates and Tables and write newsletters for other publishers.