14 Feb 2024
Following HMRC’s announcement that it will not appeal against Loose Women presenter Kaye Adams’ court win over IR35 rules, Wylie & Bisset, Accountants and Business Advisers, says that the case illustrates the uncertainty surrounding agreeing an IR35 determination with HMRC.
TV presenter Adams has successfully argued that she is not an employee, amidst an HMRC clampdown over the application of the intermediaries legislation.
Last year, she won a third court victory over a disputed £124,000 tax bill, which, after relief for tax already paid, would likely have reduced to around £70,000.
HMRC’s short statement cites that they ‘don’t think it would be proportionate to appeal in this case’ referring to the amount of tax at stake.
Gavin Brown, senior tax manager at Wylie & Bisset, said: “Despite HMRC’s third consecutive defeat in the courts, their statement reflects their on-going belief that Adams is an employee, as opposed to a contractor. This displays the difficulty that can arise in winning an argument with HMRC over an individual’s employment status.
“Most taxpayers will not have access to the funds Ms Adams had to defend their case in court, so in order to put yourself in the best position to ward off any challenge, it is important that an iron clad contract is established at the outset of an engagement.”
Mr Brown stressed that it is difficult to take one case in isolation and apply it to another individual’s circumstances, where the type of work in which they are engaged may differ and where different factors and weighting will apply.
“There was a lot of discussion in the Adams case around the amount of time spent carrying out work for the BBC, as well as the length of the engagement and the percentage of total income which arose from this work,” he said.
“Other IR35 cases may focus on the mutuality of obligation to provide and carry out work, or the extent of control an individual has over the services they provide. Whilst all these factors will be considered on an IR35 review, there’s no one-size-fits-all formula when determining IR35 status, and the importance and weighting given to each factor can vary from case to case.
“The legislation has changed considerably over recent years and who is responsible for determining IR35 status can vary depending on an individual’s contract, who the end user is and the size of the end user. Although the IR35 rules only apply where an intermediary is involved, there are similar issues and complications when engaging directly with a self-employed individual.”
It is for these reasons that, whether you are a company engaging with contractors, or a contractor engaging with a third party, it is essential to seek professional advice.
For further information please contact Gavin Brown on 0141 566 7000.
