In a recent case brought before the first tier tribunal, Christa Ackroyd Media Limited v HMRC, the tribunal held that the former BBC television presenter had been caught under the IR35 regulations.
These rules which have come to be commonly known as IR35 apply where an individual is engaged via an intermediary (in this case her own personal service company) under such terms that would be considered to be employment by the end user if engaged directly.
Christa Ackroyd wa the presenter of the BBC program Look North until 2013 and was engaged by the corporation via her personal service company.
The dispute centred around whether Ackroyd would have been an employee of the BBC had she been engaged directly on the same terms.
Ms Ackroyds company was also appealing against demands from HMRC for £419,151 relating to PAYE and NIC charged due to payment of expenses.
The First Tier Tribunal (FTT) considered this as requiring two condition namely ‘mutuality of obligation’ and Control which, if both conditions were met, would have the effect of making an hypothetical contract one of employment unless other provisions were inconsistant with employment and therfore be caught by IR35 provisions.
Mutuality of obligation
This was not under dispute as the BBC had to pay fees to Ackroyd and she was required to work for the BBC for 225 days per year. This was sufficient to meet the first condition
There was an expectation that Ackroyd would have been required to adhere to the BBC editorial guidelines, as she was not contractually bound to follow the guidelines the BBC must have exercised control over her work.
Although the BBC did act on her suggestions it was considered that this was because she was an experienced professional rather than it was being obligated to do so.
Overall it was found by the FTT that the BBC excercised sufficient control over Ackroyds work to meet this condition
There had been no right of substitution which, although could be an indicator of employment, the FTT did not consider as being significant in the context of her position.
In the eyes of third parties such as viewers Ackroyd did appear to be part of the BBC however again in the deliberation of the FTT this was not considered to be a significant factor.
The limited company (CAM) contract with the BBC was for 7 years rather than a series of short term contracts which did point towards a contract of employment.
Fees to CAM had been paid monthly which was again not considered significant
Another key factor considered was that her co presenter on ‘Look North’ was on the BBC payroll.
The company could not make a loss on the contract and there was provisions for additional fees to be paid if targets set had been met. The FTT considered this factor to be neutral in its determination
Ackroyd had made claims from her limited company for expenses to be reimbursed on the basis that she was an employee……..
A subscription to Sky TV on the basis that she needed to be aware of the latest regional news and sports stories. The FTT did not dispute that there was a business use BUT considered that there was a personal element to the use therfore PAYE and NI should apply to the payments
Use of Home Ackroyd prepared her work at home as there was nowhere set aside at the BBC for her to do this however there was no ‘concious agreement’ between CAM Limited and herself for any homeworking arrangements and there had been no evidence of any additional costs incurred. The FTT therefore ruled that the payments made should also be subject to PAYE and NI.
It will be interesting to see if there is an appeal to a higher court over this decision and whther this ruling will be used by HMRC against other BBC presenters and others that operate via personal service companies.
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