IR35 anti-avoidance legislation – are you up to speed?

Earlier this year, HM Revenue & Customs (HMRC) won an important case against ex-BBC Presenter Christa Ackroyd in relation to IR35 – delivering the first ruling of its kind in seven years.

Ms Ackroyd, who formerly worked as a Presenter for the BBC’s Look North programme through her own limited company, found herself facing a legal battle after HMRC alleged that she owed approximately £419,151 in income tax and National Insurance Contributions (NICs).

The tax HMRC claimed she owed related to the 2006/07 to 2012/13 financial years, during which time Ms Ackroyd alleged that she had been operating as a contractor via her own limited company – a decision made purely because the BBC had insisted she do so.

In Court, Ms Ackroyd presented evidence indicating that the work she had undertaken for the BBC had been carried out in exchange for a guarantee of “independence and control.”

However, examining the evidence, it was decided that the terms of the contract itself and her longstanding relationship with the BBC “simply contained too many factors pointing towards an employment relationship.”

For example, the contract restricted Ms Ackroyd from providing any services to other organisations in the UK without first obtaining the consent of the BBC. Furthermore, the contract indicated that Ms Ackroyd was contractually obliged to provide services to the broadcaster – while the BBC was simultaneously obliged to pay fees to Ms Ackryod’s company, CAM Ltd, on a monthly basis.

Due to these conditions and more, Ms Ackroyd lost her appeal and HMRC insisted that she indeed owed the money.

This was despite the fact that Ms Ackroyd insisted she had sought reassurances from her accountant that her affairs with the BBC were not caught within the scope of IR35.

The case highlights the importance of contractors doing their utmost to ensure that they are up-to-date with IR35 anti-avoidance legislation – and that they have carried out any appropriate due diligence before and during a contract.

Equally, contractors should always seek the advice of specialist IR35 experts such as Haslers when it comes to such matters – as advice from accountants or other advisers with limited experience of the complexities of IR35 may not always be water-tight, as the case demonstrates.

To find out more about how Haslers can help with IR35, please contact us on 020 8418 3327.