Paul Hawksbee, presenter at Talksport, has had the IR35 assessment, raised on his personal service company Kickabout Productions Limited, reinstated following overturn at the Upper Tier Tribunal.
Kickabout Productions Limited contracted Mr Hawksbee’s services as a radio presenter to Talksport for a number of years. HMRC questioned his employment status under the IR35 legislation and raised an assessment for the period 2012 to 2015. Kickabout Productions and Mr Hawksbee took the case to the First Tier Tribunal (FTT), who agreed that IR35 should not apply. The key decision was that there was not sufficient mutuality of obligation under the hypothetical contract and that control was not absolute.
HMRC raised an appeal to the Upper Tier Tribunal (UTT) on eight grounds where they disagreed with the points made by the FTT in arriving at the decision, however only the first point of appeal was required to be considered:
(1) The FTT (noting here that the FTT is referred to as a collective, it is important that we stress there was a dissenting judge in the first conclusion, Mr Baker) erred in law and/or reached a perverse conclusion in finding that under the actual contracts, Talksport had no obligation to provide any work to Kickabout Productions. In addition, the FTT erred in law in finding, at the third stage of its analysis of the Ready Mixed Concrete criterion, that an obligation on an employer to offer work during the term of a contract is a ‘touchstone of employment’, the absence of which points away from employment and towards self-employment.
The UTT found that the principle of a ‘sufficient framework of control’, as outlined in their decision on Ready Made Concrete, was clearly demonstrated. The UTT said “We consider, however, that the hypothetical contract’s duration of two years, with four months’ notice of termination required, was an indicator of employment status and was not (as the FTT considered) a neutral factor. Similarly, the fact that Mr Hawksbee had been presenting, or co-presenting, the show for some 18 years pointed in favour of employment status.”
This meant that the factor of ‘mutuality of obligations’ had been met and the principals not properly applied. This was found to be a deciding factor when considered in light of the previous findings that an element of control was levied and personal service was required.
On review by the UTT on 28 July 2020, it was found that the original determination from HMRC was valid and the hypothetical contract was inside IR35.
PAYE of circa £90,000 and NIC of £53,000 will now be due following this judgement.
How can we help?
This decision finds again that both the contractual arrangements and the matter of what happens in practice are important when concluding on the key employment indicators of mutuality of obligation, control and personal service. The ease with which the UTT overturned the original decision shows that employment status and IR35 continue to be contentious issues that require professional advice.
If you are currently contracting with a high degree of personal service, this case shows the importance of ensuring both your contract and working practices are reflective of a lack of obligation and control. If you have any concerns over how this case may affect you, or you wish to discuss your circumstances further, please get in touch with me or any of the employment tax team at PKF Francis Clark.