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Talksport presenter wins split IR35 decision

12th Jul 2019
Tax Writer Taxwriter Ltd
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Paul Hawksbee
Talksport

Radio host Paul Hawksbee has seen off an IR35 challenge in which HMRC demanded tax and NIC of £143,126 from his company Kickabout Productions Ltd.

This is the fourth in a series of cases involving TV and radio presenters (following Ackroyd, Lorraine Kelly and Kaye Adams) who were accused of not complying with IR35 rules in respect of contracts performed through their personal service companies. There may be further IR35 cases concerning actors and presenters in the tribunal pipeline.

Freelance career

Paul Hawksbee has worked as a comedy scriptwriter since 1985, writing for a number of successful TV shows, including all 161 episodes of ‘Harry Hill’s TV Burp’. In January 2001, on the advice of his accountant, he set up Kickabout Productions Ltd to provide his services on a range of projects. Around the same date, he began to co-present a live show each weekday on Talksport Radio with Andy Jacobs.

This case (TC07230) concerned only his work for Talksport in the tax years 2012/13 to 2014/15, which represented around 90% of the income of Kickabout Productions in that period. Hawksbee was contracted to present at least 222 shows per year, at £575 per programme plus expenses, but he was only paid for the shows he presented.

Evidence

The FTT examined two written agreements which covered the three-year period. Each agreement with Talksport was renewed every two years.

However, the agreement which commenced on 1 January 2012 took the form of a letter between Talksport and Hawksbee, not a contract with his company Kickabout Productions. The tribunal accepted this was an administrative error, and that it should be treated as a letter from Talksport to Kickabout.

The FTT also heard evidence from the Talksport programme director Liam Fisher and Hawksbee himself.

Split opinion

This was not a slam-dunk victory for Hawksbee.

There are two members of each first tier tribunal: a judge and a lay member. Charles Baker, the lay member, did not agree with Judge Scott on three points, which could tip the next IR35 case in favour of HMRC.

Mutuality of obligation

If there is a mutuality of obligation for the engager to provide work and the individual to accept it, this is an indication of an employer/employee relationship.

It appears that Hawksbee had to perform each show personally, as there was no right of substitution mentioned in either of the written agreements or in other verbal evidence.

However, Talksport didn’t have to broadcast each live show and it did, in fact, cancel the show on two occasions at short notice after terrorist incidents. This led Judge Scott to conclude that the radio station was not obliged to provide work for Hawksbee, and overall there was no mutuality of obligation.

Baker disagreed on the basis that the written agreements required Hawksbee to present at least 222 shows a year, notwithstanding the fact that Hawksbee could decline to present a particular show in the case of illness or other factors.

Thus, within the agreements, Talksport had an obligation to provide the medium of the daily show and Hawksbee had an obligation to present each show. In Baker’s view, a mutuality of obligation did exist.  

Control

A key point was whether Talksport exercised control over Hawkbee’s work in writing and presenting his daily show. HMRC argued that it was enough for the right of control to exist and that it was not necessary for control to be exercised in the relationship, but Judge Scott disagreed. He noted that this area of evidence was apparently well-rehearsed by both Hawksbee and the Fisher.

The FTT concluded Talksport had control over where and when the work was performed but the radio station did not control how Hawksbee performed his services or what was included in the programmes.

Part and parcel

Where an individual has rights and obligations similar to those which would apply to an employee and is regarded as part and parcel of the engager’s organisation, this points towards an employee/employer relationship.

The Talksport contracts did not mention rights in respect of holiday, sick pay, pensions or paternity leave. Hawksbee did not attend staff events, had no line manager, and was not obliged to undertake training or appraisals. Judge Scott took the absence of these factors as indications that no employee/employer relationship existed.

Baker took a different view, agreeing with HMRC that contracts between companies would not cover sick pay etc, thus the absence of such rights cannot be considered as pointing away from an employment relationship. Baker also argued that FTT cannot know whether the hypothetical contract would or would not contain employment rights.

Financial risk

HMRC argued that Hawksbee took no financial risk and was not in business on his own account, as there was no realistic possibility of making a loss and no means to increase his profits from the Talksport engagement.

This was a particularly blinkered view as Hawksbee was also performing work for other customers in the period and turned down work offered in order to complete the Talksport shows. Judge Scott commented that Hawksbee’s financial risk turned on his opportunity cost.

Conclusion

Baker concluded that Hawksbee would be treated as an employee under a hypothetical contract which ignores Kickabout Productions in the relationship with Talksport, and thus IR35 would apply to his earnings from Talksport.

However, Judge Scott, in looking at the picture presented by all factors concluded that the relationship was not one of employment and IR35 did not apply. As Judge Scott had the casting vote, the FTT found for the taxpayer.

Replies (11)

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By mkowl
12th Jul 2019 09:51

the most shocking thing about this he is paid £575 per programme. Have you ever listened to it !

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By Michael Davies
12th Jul 2019 10:47

I have dipped into their show now and then.Whats their hours 3 per show ? £200 an hour ?Compared to some BBC presenters probably reasonable value.Surprised Hawksbee got away with it.But there again some of these Judges hmm ?

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By schocca
12th Jul 2019 10:54

With no Mutuality of obligation in the CEST tool - HMRC have a problem... I foresee that the CEST tool will be pulled out at a tribunal and thrown to the dogs.

So this is the nth IR35 tribunal that HMRC has lost in the last 12 months - MOO and financial risks being key factors in a lot of those cases... It's not looking good for the CEST rollout into the private sector next April...

But as HMRC listen to nobody apart from the Treasury, it's going to be the usual mess up for all...

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By memyself-eye
12th Jul 2019 11:11

Becoming a bit of a ritual, this: If HMRC keep losing cases when 'personalities' are involved and it is their persona that the public sees (Lorraine Kelly et al) where you might suppose - as HMRC clearly do - that the case would be a no brainer from their standpoint, why do they keep persisting?
Answer (1) because it's not their money they are wasting
(2)because they or their political masters are fixated with IR35 and desperate to apply it come what may
Still, one more case to throw back at them for any one else caught up in this nonsense.
What with this and MTD is anyone at HMRC doing anything else?
Don't answer that......

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By raju m
12th Jul 2019 11:15

Once again more confusion then clear decision.

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By johnjenkins
12th Jul 2019 11:36

However HMRC try to word their IR35 it won't work. Why? Because it's concept is wrong. IR35 is artificial, one of Gordon Brown's fantasies.
Employment status is up to the work giver and the work doer and nothing to do with HMRC.

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Replying to johnjenkins:
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By Pam Moreland
12th Jul 2019 16:28

This is 100% correct - a civil servant designed 'solution' which is completely unworkable and impractical. This was borne out by the scenarios they once published which were more like a story book for children that what actual happens in the real world. The more they try to clarify the worse it gets.

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By Andy Reeves
12th Jul 2019 12:36

What is the point of a two person tribunal where one has the casting vote?

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7om
By Tom 7000
12th Jul 2019 13:28

Just put dividend tax up 10% and cancel IR35.... that solves it

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By doorsteps
12th Jul 2019 14:42

You really do have to wonder who in HMRC is making the decision to repeatedly take these cases to tribunal. Someone should ask for a freedom of information act request and ask for IR35 tax yield figures ... they would be revealing I suggest.

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By C Graham
12th Jul 2019 17:34

totally agree @johnjenkins.

Ok so in order to watch BBC tv, I have to pay for a licence. That in effect is a contract between me, the viewer and BBC, the provider of those services. I cannot copy or broadcast that material to other viewers therefore a degree of control exists.

There is a mutual obligation that by purchasing a licence, the BBC has to let me watch BBC tv as a viewer. Therefore a contract exists through that licence so I must be a BBC employee and I would like paid holiday, pension please etc.

Mutual obligation is the whole point of drawing up a contract. Defining what you will give in return for a fee.
And parameters have to exist in context of the services delivered.

The employee is not a separate entity to the employer since an employment contract means the employee agrees to perform a role on behalf of and to the benefit of the employer and control is therefore assumed. Unlike in a contract situation where control is mutual and so two entities need to agree terms - ie what will be offered in return for what will be paid.

If HMRC had won this case, wouldn't every goods or service supplier to eg, M+S, sainsburys etc be treated as employment since there is mutual obligation in most contracts and control. There will be agreed elements (clauses) to determine the delivery (ie control of the product or service being produced).

In their continued desperation to twist IR35 into every contract situation, HMRC have again cost the taxpayer money in fighting an unsuccessful case. When will they abolish IR35 and accept that most situations operate legitimately under contracts and are not disguised employment. Yet again in trying to un-disguise a contract as employment they simply demonstrate that it was not disguised at all.

Good that the tax payer won the round regardless of the debate about the quality of broadcast/programme.

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