- 11 October 2019
As the April 2020 IR35 changes loom ever larger, there is a lot of attention on challenges under the current system to the tax arrangements of consultants providing work through their own personal service companies.
In our previous article about a television presenter being pursued by HMRC for tax payments, the Claimant’s arrangements with the BBC were held to be self-employment rather than an employment relationship.
However, in the recent case of Paya Limited and others v HMRC , the tax tribunal has found that three presenters who were engaged by the BBC through personal service companies were employees for the purpose of tax.
Whilst the presenters had argued that they were self-employed, the tribunal ruled that the ‘assumed relationships were ones of employment’ because the BBC:
- retained creative control
- instructed the presenters on how the work was to be carried out and when
- had the right to prevent the presenters from working for any other broadcaster.
The presenters and the BBC were collectively liable for £920,000 in unpaid taxes.
The tribunal ruled that the ‘assumed relationships were ones of employment’.
It also stated that the BBC had effectively required the presenters to be engaged through personal service companies due to an “imbalance of bargaining power”. Since the judgment, the BBC has acknowledged its responsibility for the contracts, and it has said it will help the presenters resolve the cases, with two-thirds of the bill reportedly already settled.
This case could have implications for more than 100 other presenters who work under personal service companies and may now face a large tax bill.
Businesses are advised to actively prepare for the IR35 changes that will take place in April 2020 by reviewing their contracts and relationships with contractors. For more information on how to prepare for IR35 changes in advance of April 2020, get in touch with our Employment department.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.
About this article
SubjectIR35: control comes at a £920,000 cost
Published11 October 2019
Read, listen and watch our latest insights
- 22 September 2023
Talking Employment Law: New family friendly rights
In this first podcast in the ‘Talking Employment Law’ series, Lucy Densham Brown and Rebecca Dowle, members of the employment team summarise some of the big new family-friendly Bills that are working their way through parliament.
- 20 September 2023
- Commercial Real Estate
Commercial buyers beware of residential Stamp Duty Land Tax
This article discusses a recent case in which a property buyer calculated the Stamp Duty Land Tax due on the purchase at a lower rate, due to the mixed-use purpose of the property.
- 19 September 2023
- Privacy and Data Protection
Organisations’ use of social media: Data protection
Social media applications (or commonly known as ‘apps’) are being developed all the time and we are constantly being introduced to new social media platforms, some of which take almost no time to gain huge popularity.
- 14 September 2023
Entrepreneurial Dreams: What is the Innovator Founder Visa?
In an era defined by innovation and entrepreneurship, the United Kingdom has made a substantial effort towards fostering its reputation as a global hub for start-ups and innovators. The introduction of the UK’s ‘Innovator Founder’ route has marked a pivotal moment in the country’s immigration policy.
- 11 September 2023
- Corporate and M&A
Changes to the tax treatment of Employee Ownership Trusts
The government published a consultation on 18 July 2023 seeking the public’s views on its proposals to reform the tax treatment of Employee Ownership Trusts and Employee Benefit Trusts. Parties are invited to express their opinions via email via the government website until the consultation closes on 25 September 2023.