In a case that illustrated the complexities of IR35 (also known as the intermediaries legislation), the Upper Tribunal (UT) has remitted the question of whether a TV and radio presenter provided his services as an employee for reconsideration by the First-tier Tribunal (FTT).
The presenter supplied services to the BBC and ITV through his personal service company. HM Revenue and Customs (HMRC) took the view that he was an employee for the purposes of IR35 and the company was therefore liable to Income Tax and NICs totalling more than £1.7 million in respect of the 2012-13 to 2016-17 tax years. The company appealed to the FTT.
The company accepted that there was sufficient mutuality of obligation between the presenter and the BBC to form an employment relationship: the FTT found that the same was true in respect of ITV, and also concluded that both broadcasters exercised a sufficient degree of control over him. In ruling that he was nonetheless not an employee, the FTT considered the most significant factor to be whether he was in business on his own account, if the hypothetical contracts he would have had with the broadcasters could be seen as part of that business. Concluding that this was the case, the FTT noted that he had provided his services to a significant number of clients.
HMRC appealed to the UT, arguing that the FTT had been wrong to focus on whether the presenter was generally in business on his own account, rather than putting the terms of his hypothetical contracts with the broadcasters at the centre of its analysis.
The UT noted the Court of Appeal's ruling in HMRC v Atholl House Productions Limited, which was handed down after the FTT's decision and overturned a UT decision in a similar case. The Court had found that the fact that an individual performs services for others as an independent contractor is relevant, but 'goes no further than that'. Setting aside the FTT's decision, the UT concluded that it had fallen into the same sort of error as the UT had in Atholl House.
The UT also upheld HMRC's argument that the FTT had erred in law by not making findings as to whether relevant factors, particularly the work the presenter did for other clients, could have been known to the BBC and ITV. No blame could be attached to the parties or the FTT for this omission, as the FTT's ruling pre-dated the Court of Appeal's decision in Atholl House that, when determining if someone is an employee for IR35 purposes, only factors known to the alleged employer can be taken into account. The UT ruled that the case should be remitted to the same FTT, if practicable.