Adrian Chiles employment status IR35 case

HMRC has lost its appeal in its employment status IR35 tax case relating to the TV and radio presenter Mr Adrian Chiles. This is the latest of many tax cases relating to the employment status of television and radio presenters.

Background

Adrian Chiles is well-known for presenting BBC Radio 5 Live, Working Lunch, The Money Programme, Match of the Day 2, ITV Sport, the One Show and more.

Mr Chiles was asked to cease his employment with the BBC in 1996 and provide his services only through a personal service company. From then onwards, he provided his services through his personal service company, Basic Broadcasting Ltd. Later, he also provided his services through the company for ITV and other third parties.

He had filed his tax returns on the basis that he was self-employed and not an employee of the BBC and ITV. HMRC had rejected this treatment, contending that the intermediaries legislation (known as IR35) applied to Mr Chiles’s engagements with the BBC and ITV between 2012 and 2017 and that, as such, his fees should have been treated as employment income.

First-tier Tax Tribunal

Mr Chiles appealed HMRC’s treatment of his income to the First-tier Tax Tribunal. Although his case was heard in 2019, because of the pandemic, the case report was not published until 9 February 2022.

The Tribunal considered the evidence presented relating to the actual contracts between the BBC and ITV and the ‘hypothetical contracts’. The terms of the hypothetical contracts are those that would have existed between the worker (in this case Mr Chiles) and the client (the BBC and ITV) if the intermediary company (i.e., Basic Broadcasting Ltd) did not exist. This is what the tax legislation stipulates must determine employment status for tax purposes.

The Tribunal found that there was mutuality of obligation concerning both the BBC and ITV contracts. This hallmark of employment status considers whether the client is obliged to provide work and the worker obliged to accept that work.

On another important factor, that of control, the Tribunal found that the BBC and ITV both had ‘editorial control’ but not complete control over how Mr Chiles worked ‘in the moment’.

However, despite its findings on mutuality of obligation and control, the Tribunal’s final decision rested on what it considered to be the most significant factor, which was that it found Mr Chiles had been in business on his own account. The fact that he had 40 more contracts with another 25 third parties was a key factor in the Tribunal reaching this conclusion, as well as the fact that he had employed an agent and personal assistant. On this basis, Mr Chiles won his appeal.

Moore Kingston Smith comments

The decision in this case rested on the fact that the Tribunal considered that the hypothetical contracts with the BBC and ITV were part and parcel of Mr Chiles’s business, which it concluded he had been carrying on on his own account. Based on his circumstances, this factor carried more weight than mutuality of obligation and control.

Businesses should continue to take care over employee status determinations, taking account of all the factors which the courts look at. The numerous high-profile cases of recent years have had contrasting fact patterns and there is a significant amount of case law to help inform employment status determinations. While decisions of the First-tier Tribunals are not binding, they are persuasive and can be referred to in making employment status decisions.

HMRC may well appeal this decision, as it has appealed other decisions relating to media presenters that did not go in its favour, such as Kaye Adams (Atholl House Productions Limited).