BBC Look North presenter Christa Ackroyd has lost a high profile test case with HMRC over whether or not IR35 legislation applied to her contract. The main terms of this contract, between her personal service company and the BBC, were:
- 7 year contract
- Providing tv presenting services for 225 days pa
The First Tier Tribunal appeal judge ruled that these terms were akin to ‘employment status’ in nature, due to the following key factors:
- No substitution clause
- Mutuality of obligations
- High degree of control
- High volume of years and days engaged
- Contract only terminable by material breach
- Co-presenter on Look North program engaged as an employee.
This ruling enabled HMRC to validly apply IR35 deemed salary principles and assess back taxes of £419,151, covering 7 tax years.
As engagements with public sector clients since 6 April 2017 are now subject to an IR35 review by the end client, the precedent this test case sets is not as helpful to HMRC as is often the case. But, as always, contractors should always try and strengthen their contractual terms and actual work practices from an IR35 perspective, including getting a substitution clause included in their contract.