Search

How can we help?

Icon

IR35: control comes at a £920,000 cost

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 [2019], 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.

About this article

Disclaimer
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

Read, listen and watch our latest insights

art
  • 28 February 2024
  • Commercial Real Estate

Hidden risks in serviced office agreements

This is usually a fully furnished and equipped office space that is managed by a facility management company and made available for short-term or long-term rentals to businesses, varying from one week to a year, or even longer.

art
  • 27 February 2024
  • Employment

Changing Attitudes to Menopause

We have set out some answers to the frequently asked questions that employers ask when considering how to support a menopausal employee.

art
  • 22 February 2024
  • Employment

Time to take the heat off menopausal women

On 22 February 2024, the EHRC released guidance and resources for employers designed to help employers understand their legal obligations in relation to supporting workers experiencing menopausal symptoms.

Pub
  • 22 February 2024
  • Employment

Talking Employment Law: What to do if you’re at risk of redundancy

In this podcast, Harry Berryman and Rebecca Dowle, members of the employment team, will talk through the steps that need to be taken for a redundancy to be fair and the range of criteria that can be used when determining which employees will be made redundant.

art
  • 21 February 2024
  • Immigration

FAQs Partner Visa UK

Discover the UK Spouse Visa: eligibility, finances, relationship criteria, and the latest updates in 2024 for a successful application.

art
  • 19 February 2024
  • Privacy and Data Protection

The role of Data Protection Officers in ensuring compliance

How many of us receive marketing calls for products and services we did not sign up for?