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A 1970's style room with tv | AccountingWEB | Lessons from TV stars navigating IR35 maze
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Lessons from TV stars navigating the IR35 maze

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Rebecca Seeley Harris looks at the much-missed aspects of the two recent cases involving TV presenter Kaye Adams and pundit Phil Thompson and explores the lessons that could save others from an IR35 disaster.

19th Dec 2023
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I have spent many hours looking at employment status case law over the last week. Firstly, Atholl House or the Kaye Adams case and then almost immediately PD & MJ Ltd or the Phil Thompson case.  It seems that there are a lot of similarities but, only one of them was caught by IR35 and that was Phil Tompson for nearly £300k.

Presenters and pundits

Both are TV presenters and both were appearing in the first tier tax tribunal (FTT), although it has taken Kaye Adams a little longer to get there. Phil Thompson is an ex-Liverpool football player, some say legend, and soccer pundit for Sky appearing on Soccer Saturday amongst other Sky Sports football programmes. He doesn’t appear in any other media outlets and his opinion is controlled by Sky to the extent that he cannot give it to other media outlets.

Kaye Adams was engaged by BBC Scotland to present her own show. She had other engagements and other clients at the same time and it was known that, although the BBC had the right to first call, they did consult with her on any clashes with other programmes. Contrast Thompson whose only client was Sky and this is how he derived the majority of his professional income.

Mutuality and control

It was agreed in both cases that there were mutual obligations and control. This is a really pivotal  point that seems to have been overlooked. More importantly, Atholl House although remitted back to the FTT was in the Court of Appeal and it was the Court of Appeal that gave the guidance on mutuality and control. That, as well as the guidance from the HMRC v Professional Game Match Officials Ltd (PGMOL) case in the Court of Appeal.

Put very basically, mutuality of obligations can exist in their basic form of a fee paid for work done.  This is evidenced in Atholl House where it showed that the BBC was required by each hypothetical contract to pay the minimum fee in return for the minimum commitment. The fact that the dominant feature of each hypothetical contract was personal service by Adams, together meant that the extent of mutuality of obligations was considerable. 

This, however, along with the BBC having “significant” control was not sufficient to find that it was a contract of employment. In fact, in my opinion, mutuality and control appear to have taken a bit of a back seat in this case. 

The three step

The judgment from the FTT in Atholl House is very confusing because it is trying to follow the guidance of the Court of Appeal. This shows that there is a three-step test to establish the hypothetical contract then followed by a three-stage test based on the Ready Mixed Concrete case.

In the Atholl House case, the critical question for the FTT was the third part of the third stage test or 3C. It was at this stage that control and mutuality, despite being found to be present, were then largely forgotten.

In Atholl House, the FTT appear to have made the judgement based on the following:

  1. Custom and practice – it was custom and practice in the industry for presenters to be self-employed.
  2. Brand – Kaye Adams was her own brand. Much like in Lorraine Kelly's and Adrian Chiles' cases.
  3. No employee benefits or rights – the BBC did not treat Adams like an employee and she was not entitled to employment benefits such as holiday pay.
  4. Equipment – Adams had to provide her own equipment in the form of an iPad and a mobile phone.
  5. Clothing – Adams had to provide her own clothing. 
  6. Intention – where a case is finely balanced, the court can look at the intention of the parties which, in this case, was clearly one of self-employment.

Appropriate clothing

Admittedly, I’ve not seen the factor of having to “provide the appropriate clothing”. Clothing, as we know is not an allowable expense, other than PPE or branded clothing. I would not take this as a factor to be relied upon.

Brand

If you contrast Kaye Adams and indeed Stuart Barnes with Phil Thompson, however, there is a theme. This also includes Lorraine Kelly and Adrian Chiles, those who are deemed to have a ‘brand’.  

Phil Thompson despite being a legendary ex-footballer was only known for his appearances on Sky.  He was not the voice of football, as Stuart Barnes was known generally as the voice of rugby.

Highly skilled

Thompson’s factors for being inside IR35 were down to mutuality being present, considerable control, the fact that he had no other clients and the majority of his income came from just one client and, Thompson just not being enough of a brand. 

The tribunal was not swayed by the fact he was a pundit because “employees can give advice.”  In Atholl House, the tribunal thought the fact that Kaye Adams was highly skilled neutralised the control element of the ‘how’ factor in control, it is simply not relevant. So, control then becomes more about the when, where and what factors.

Thompson was subsequently employed by Sky but, the tribunal did not take this into account when making their decision because it pre-dated the tax years in question. Thompson’s company is also in liquidation, which begs the question: how are HMRC going to recover the debt?

Sea change

Employment status is going through a sea change at present. Hopefully in 2024, the Supreme Court will provide some answers in their judgment of PGMOL v. HMRC.

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Replies (11)

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the sea otter
By memyself-eye
19th Dec 2023 14:08

Interesting - looks like we can add 'Name' to 'Moo' and 'Control'
Where IR35 is concerned it doesn't pay to keep your head below the parapet!

Thanks (1)
Replying to memyself-eye:
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By FactChecker
19th Dec 2023 20:06

Indeed, as I said in response to Rebecca's previous article of a few days ago on the very same topic - the conclusion could be paraphrased as:

"Phil Thompson not as famous as Kaye Adams, Lorraine Kelly, Adrian Chiles or Stuart Barnes."

Thanks (2)
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By petestar1969
20th Dec 2023 09:31

HMRC couldn't run a bath.

Thanks (4)
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By johnjenkins
20th Dec 2023 10:24

What did Mr. Davies say in Parliament? IR35 should go and HMRC should stop bullying the self-employed. At last a Tory politician willing to say what everyone is thinking.

Thanks (6)
By tonyaustin
20th Dec 2023 12:26

If Phil Thompson et al had not used companies, the tax risk would have been on Sky (or BBC or ITV etc.) because then the onus is on the client to decide whether or not to operate PAYE. The other reason for using a company is that a director shareholder can be remunerated with dividends instead of salary, which means greater net income.

Thanks (1)
Replying to tonyaustin:
the sea otter
By memyself-eye
20th Dec 2023 17:54

It did until the tax on the beneficiaries of dividends was introduced.....
That should have settled the issue.

Thanks (1)
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By vstrad
20th Dec 2023 12:31

If we could only stop arguing about the fine details of employment status we could get on with the important stuff, like how many angels can dance on the head of a pin.

Thanks (2)
Replying to vstrad:
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By johnjenkins
20th Dec 2023 15:01

Hark the herald angels siiing.
Look at us dancing on a pin.

Thanks (0)
Replying to vstrad:
the sea otter
By memyself-eye
20th Dec 2023 17:56

Having just returned from The Angel, I can report, one.
Hic!

Thanks (2)
By cfield
31st Jan 2024 15:49

It's no good just being famous. You've got to be famous for the right reason. In other words, you've got to monetise your fame by building a recognisable brand. Phil Thompson didn't, perhaps due to the strictures of his contract.

In the early years of IR35, it was always stressed that it applied only to individual contracts, not to the company or director, so it was possible to be inside IR35 on some but not others. In other words, your other activities via the company were supposed to be irrelevant in the main and only tip the balance in borderline cases where being in business was an issue.

This seems to have gone by the board now. I suppose the thinking was that having other clients was indicative of independence; i.e. lack of control by the client, as you probably wouldn't even have had the scope to work elsewhere in a contract of service where the client exercised control over your working time.

It now seems that control itself is taking a back seat, which flies in the face of everything I've ever learnt about IR35. One thing's for certain. The law on this is still not set in stone even after all these years, and continues to evolve, which perhaps is a good thing. Law should never become obsolete or anachronistic, as it so often does, to the detriment of society at large.

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Replying to cfield:
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By johnjenkins
31st Jan 2024 16:11

IR35 should never have been allowed to get off the drawing board. It is stifling the economy and will eventually stop people from working. Why do you think the Fujitsu workers are on strike for more money.

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