22 Feb 2018

HMRC wins case against presenter

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HMRC won their first battle over the employment status of a TV presenter. Christa Ackroyd Media v HMRC is the first case to go to the tax tribunals regarding a presenter in HMRC’s pursuit of the media industry. HMRC currently have a considerable number of live enquiries into the employment status of people in the media industry with a particular focus on TV and radio presenters. Whilst this was not a lead case, it would be highly influential in any other similar cases and HMRC would expect many other taxpayers to now settle their affairs based on the outcome of this case.

It is worth noting that we have reviewed a number of other cases recently regarding presenters and whilst some would be caught by the Intermediaries legislation, this should not be treated as a foregone conclusion as every case is different and we have seen a lot of examples where people work very differently to Ms Ackroyd and could demonstrate they would not be deemed employees.

Some of the key findings in this case were that the BBC approached Ms Ackroyd to work on their Look North program and requested that she provided her services through her own limited company so they could avoid accounting for tax and national insurance and not be concerned with employment status and employment rights. Ms Ackroyd was tasked with transforming an underperforming show to one that had higher ratings than its competitor. Ms Ackroyd was fundamental in achieving this and initially had a five year contract with the BBC (which was later extended by another seven years) as well as negotiating a £15k a year payment if the ratings of Look North were higher than that of the competing ITV Channel.

Part of the agreement was that the BBC would have first call on the services of Ms Ackroyd for 225 days per year as required and that the agreement could only be terminated if the contract was breached. This established mutuality of obligations which is an important component in establishing an employment relationship.

The BBC also requested that Ms Ackroyd gave up writing for a newspaper and the contract stipulated that if she was to undertake work for anyone else she would need the BBC’s approval first. There was not opportunities for the taxpayer to make a loss on her work nor were there opportunities to profit form the sound management of her business (other than the ratings bonus) which lead the court to hold that Ms Ackroyd was no in business on her own account.

The contract specifically stated that she could not use a substitute for the work which meant personal service was required.

As a result of the above the pivotal argument for demonstrating that IR35 did not apply and she was not to be deemed an employee was whether there was a sufficient degree of control over her work. Ms Ackroyd argued that she was given a guarantee of independence and control when she accepted the position, she would not have accepted any control by the BBC and would use her time as she saw fit during the day. The judge believed otherwise however and accepted that she was a highly skilled individual and in practice may not have been subject to control but was of the opinion that the BBC retained the ultimate right of control. This was supported by the 359 page editorial guidelines that presenters for the BBC were obliged to follow and the fact that the editors had control over the content including what stories to cover and in what order. The BBC could also require her to work on a particular story so had control over what work Ms Ackroyd performed.

We can understand why this case was taken to the tribunal because whilst control was the only real argument to show she was not an employee, Ms Ackroyd had a very high degree of autonomy over how she worked and she maintained that she had only ever seen the editorial guidelines once and they were not binding on her. The problem was however that although there wasn’t much by way of control, the right of control existed.

This judgment is a must read for anyone in the media industry that operates via their own personal services company whether there is already an HMRC enquiry or not.