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HMRC wins first IR35 case for almost a decade

HMRC wins first IR35 case for almost a decade

HMRC has won its first IR35 case in almost a decade after a British Broadcasting Corporation (BBC) presenter was found to be in breach of the legislation.

Christa Ackroyd operated as a personal service company (PSC) named Christa Ackroyd Media LTD which contracted to the BBC. She has this week lost her appeal against HMRC covering tax years 2006/7-2012/13. This is despite the BBC advising her to work this way.

This means the former Look North presenter owes National Insurance and Income Tax totalling £419,151. This will be seen as a big win for the government and is their first IR35 case success in nearly 10 years.

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This could be the first of a number of similar findings, following a mass clampdown on television presenters around IR35, first reported by ContractorCalculator. It is thought that higher profile cases of a similar nature could soon follow.

Little consolation

But that will be little consolation to Christa Ackroyd, who stopped working with the BBC in 2013.

During the evidence stage, Ackroyd said that the BBC insisted she worked as a PSC. In addition her accountant informed her that everything was in order.

Ackroyd’s actual working practices and the contract she signed, however, have led to this week’s verdict.

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The contract Ackroyd signed and worked under meant that she couldn’t provide a service to other organisations. She was contracted to provide services and the BBC was contracted to pay them. In addition, she was prohibited from using a substitute.

The BBC were also found to be in control of the content Ackroyd provided, and the services on offer.

Fair or unfair

Dave Chaplin of ContractorCalculator, who broke the news, warned that a blasé attitude towards IR35 can only lead to problems.

“Despite apparent reassurances from trusted personnel that her affairs were in order, Ms Ackroyd’s engagement was firmly within the scope of IR35,” Chaplin said. “This case should serve as a reminder to contractors to carry out their due diligence before and during a contract. Lip service from an end client, or assurances from anybody other than a legal IR35 expert, won’t be enough to guarantee safety from IR35.”

As to if this opens the floodgates to more findings in this manner we will wait and see. Another IR35 judgement in a high profile case is due anytime soon. With the government peddling a consistent line about how IR35 is succeeding, this might not be just the first IR35 case HRMC wins anytime soon...

The full decision can be read here.