An odd side effect of Covid is the rescheduling of all games so that football is seemingly on TV all the time. You find yourself watching the Monday, 4am kick-off between Burnley and Crystal Palace just because you have James Tarkowski as captain in your fantasy football team. Last weekend’s Champions League final between Chelsea and Man City represented the end of domestic club competition. Normally, in a year ending with an odd number, this gives jaded football fans some respite. Unfortunately, the Euros (that is still being called Euros 2020 despite clearly being held in 2021) is due to start in just over a week.
For those not emotionally shattered by football, perhaps this two-week hiatus has you crawling the walls with boredom, desperately trying to find some sporting excitement anywhere you can. Perhaps you found yourself watching Eurosport’s coverage of the Ukrainian fishing championships. Perhaps you found yourself in a local park engrossed by an amateur quidditch match. So, if you’re really desperate for some lively competition, perhaps I can tempt you with a little something from the tax world.
If you’re after sporting cliches, it’s got them all. David vs Goliath. The poor, little taxpayer against the might of HMRC. Glamorous, talented individuals (Eamonn Holmes is involved) pitting themselves against boring, robotic tax officers (think Rocky training in a barn while Ivan Drago is hooked up to a data analysis machine in a gym). And there are high stakes – a huge chunk of cash that the taxman wants back.
You see, a few years ago, HMRC started to get quite grumpy about presenters – the people that host our favourite radio and TV shows. The taxman decided they were being incorrectly treated as self-employed people, normally operating through companies, and should have been employees. Under laws known colloquially as IR35, HMRC started to enquire into various presenters’ tax returns and issued demands for underpaid tax. Those that disagreed with HMRC have appealed to a tax tribunal and, what with that being a public forum, this means we can watch on with excitement.
To keep to the sporting theme, I’ll summarise the current score based on the presenters’ cases to-date:
HMRC 1 – 0 Presenters
Christa Ackroyd (February 18)
An early setback for the underdogs. Christa Ackroyd, a plucky BBC Look North presenter was the first to take on HMRC’s might. She lost in the First Tier Tribunal (‘FTT’) as they felt she did not have enough control over what she was going on in the newsroom. (The engager controlling what you do is a sign of an employment relationship.) The judge did say she was an honest person though, but I doubt that will offer much consolation.
HMRC 1 – 1 Presenters
Lorraine Kelly (March 19)
The presenters are back level! Experienced veteran, Lorraine Kelly, who fends off a £1.2m tax bill with some expert (legal) defending. The fact she had so much control over the output on the show, plus her ad-libbing interviews with guests, and other business interests convinced the judge she was self-employed. To add insult to HMRC’s injury, the judge confirmed she is an artiste so could have claimed agent fees even if she was deemed to be an employee (irrelevant in the end, but this is what the tabloids latched onto).
HMRC 1 – 2 Presenters
Kaye Adams (April 19)
They’re turned it around and with some style. Classy stuff from the Loose Women and BBC radio presenter. Indeed, the fact Ms Adams had multiple engagements helped convince the judges she was self-employed.
HMRC 1 – 3 Presenters
Paul Hawksbee (June 19)
A tight call, gone down to the nose, but the presenters have just edged this round. The TalkSPORT presenter, despite being on the same daily show for 18 years, won on a split decision, meaning the casting vote was given to the judge, who decided for the taxpayer. (For a FTT there is a judge and a ‘lay person’, and if they disagree the judge’s opinion takes precedent.)
HMRC 2 – 3 Presenters
David Eaves, Tim Wilcox and Joanna Gosling (September 19)
Disaster. It could be argued this is three wins for HMRC as these appeals were heard together as they were essentially the same argument. These three BBC news reporters were deemed to have insufficient control in their working relationship, so were employees. Another close one – the casting voting was this time in favour of the judge who went against them. This decision did not reflect well on the BBC, with the judge stating “the BBC was in a unique position and used it to force presenters into contracting to personal service companies and accept reductions in pay”.
HMRC 3 – 3 Presenters
Christa Ackroyd UTT (October 19)
Lightning strikes twice. It’s defeat again for Ms Ackroyd and HMRC are back level just when you thought they were out of it. The FTT decision was appealed at Upper Tier Tribunal (‘UTT’), a higher court, which now means the decision can be binding for other decisions in the FTT. Not great news for other presenters, but each case is judged on its own merits.
HMRC 4 – 3 Presenters
Eamonn Holmes (February 20)
Nightmare for the big man and the taxman has taken them lead. Arguably a surprise result given he hosts a similar show, in the slot before Lorraine Kelly and on the same channel, but there was apparently more evidence of control by ITV and mutuality of obligation (‘MOO’) – i.e. ITV is obliged to offer the work and Mr Holmes is obliged to accept it.
HMRC 5 – 3 Presenters
Paul Hawksbee UTT (July 20)
HMRC did not like that FTT decision one bit and have come storming back to overturn the decision. The split decision has egged them on and they have now convinced the UTT judges that there indeed was control and MOO, helped by Mr Hawksbee’s four month notice period. And Mr Hawksbee can argue until the cows come home, but he’ll need to do that at the Court of Appeal (at which point his legal fees might outweigh the taxes at stake).
HMRC 5 – 4 Presenters
Kaye Adams UTT (Feb 21)
The ever-reliable Ms Adams keeps the presenters in the contest with another fine performance. Despite the worrying string of four back-to-back defeats for the presenters, HMRC’s appeal to the UTT fell on deaf ears, or rather, judges that could clearly see Ms Adams control over her engagements. A joy to watch.
They think it is all over… well, afraid not. These tax cases will keep rumbling on, with Eamonn Holmes appealing his decision at the UTT and the news that Gary Lineker, sporting royalty, having a similar case examining his work for the BBC and BT set for the near future. With Mr Lineker’s disputed taxes nearing £5m, this could be a major case and a must watch. And as you can see from the decisions so far, it really is hard to tell how it will fall.
So, clearly the world of tax can be just exciting as football. It just needs a logo, better PR, a catchy anthem and a couple of reliable presenters. The question is – should they be on the payroll?
Tax law is constantly changing, so the issues discussed here might now be out of date. Each taxpayer is different; therefore, we recommend that you consider your options carefully with an expert before taking any actions.
If you want to discuss any of the above, or any other matter, just give us a call on 020 7183 3383 or email info@kma-spotlight.com.
