TV Presenter Not an Employee Under IR35
An individual’s employment status for tax determines the taxes they pay. Individuals who avoid income tax and National insurance by supplying services through an intermediary in order to disguise their employment status, are targeted under a set of rules.
Recent case law demonstrates how a hypothetical contract of employment between the two parties contracting through a personal service company can lead to large tax bills.
In the case of Basic Broadcasting v HMRC however, the First-tier tribunal has held there to be no employment relationship between TV presenter Adrian Chiles, and two TV companies, despite mutuality of obligation and control being established.
Mr Chiles is a director of his personal service company, Basic Broadcasting Ltd. He performed services for the BBC and ITV through Basic. His hypothetical contracts with each of the TV companies were lengthy and represented over 75% of his income (although took up less than half his working time).
Mutuality of Obligation
In examining the relationship between Mr Chiles and the two TV companies, the tribunal found there was mutuality of obligation, in that Mr Chiles was under 'some' obligation to work, and the TV companies were under the obligation to pay for his work. The tribunal also found that Mr Chiles was under the TV companies' control in terms of the way editorial control was exerted over the content he produced.
However, the tribunal found that because Mr Chiles was in business on his own account, and had entered into the relevant contracts as part of that business, there was no employment relationship between him and the TV companies.
What Was the Tribunal's Decision?
In reaching its decision, the tribunal took into account Mr Chiles' freelance work history, in particular that he:
- used a management company (to which he paid a 15% commission) and a personal assistant to promote his reputation and generally manage his career, which was indicative of sound business management
- provided his services to 25 additional clients, generating over £350,000
- used his own tools (in particular, a home office) to provide his services to the TV companies, and was not integrated into their businesses (although he was an integral part of the programmes he presented)
HMRC may yet seek to appeal the decision to the Upper Tier Tax tribunal. We will provide a further update if an appeal is heard.