Employment status remains contentious in latest case decisions on TV presenters
There have been several recent employment status case decisions involving TV presenters, to add to the long list of previous HMRC cases.
Three BBC News and BBC World presenters
In Paya and others v HMRC, the First-tier Tribunal failed to reach a unanimous agreement in the case of the personal service companies operated by three BBC TV presenters, with the case concluded only on the casting vote of the Judge.
This decision, released on 17 September 2019, is the latest of several recent decisions relating to the employment status of television and radio presenters who provided their services to broadcasters (primarily BBC or ITV) through personal service companies.
The decision, running to over 170 pages, has taken 16 months to be published. This was after the case lasting ten days. It appears that despite the increasing volume of court time spent, and case law generated, on employment status for individuals in broadcasting in particular, the issue of whether an individual should be treated as employed or self-employed remains extremely complex.
Facts and implications
The case concerns three BBC TV presenters – Joanna Gosling, Tim Willcox and David Eades. Each presenter was paid through their own individual personal service company, which were respectively Paya Ltd, Tim Willcox Ltd and Allday Media Ltd. For many years the three individuals had operated under arrangements where their services were provided to the BBC under the terms of contracts with their personal service companies. The case considered several issues, one of which was whether the presenters’ relationships with BBC would have been assumed to be of employment or self-employment had they notionally had a direct contract with the BBC.
Broadly, the implications of the finding that the assumed relationships were of employment are that the personal service companies should have calculated tax and national insurance on the payments they received from the BBC in a similar way to the tax and NI (including employer’s NI) which would have fallen due had the three individuals been direct employees of the BBC under the IR35 rules. This is how the rules operated in the public sector before the introduction of the ‘off-payroll working’ rules in April 2017.
Degree of control
The Tribunal considered the relevant background facts and case law at length. In its discussions, the key factors were: the degree of control the BBC had over the presenters, the requirements to adhere to the BBC’s Editorial Guidelines and how the personal service company contracts set out requirements regarding minimum working days. They did not consider the amounts involved, but going back for a number of years the amounts may have been substantial.
One Tribunal member disagreed with the Judge’s assertion that the assumed contracts would have been employment contracts. He stated that he saw it as significant that there was an imbalance of bargaining power and that the presenters were free to appear elsewhere. The Judge had the casting vote, however, and so ultimately the First-tier Tribunal found that the arrangements between the three personal service companies and the BBC were of employment. It remains to be seen whether the presenters will appeal this decision to the Upper Tribunal.
Christa Ackroyd’s appeal to the Upper Tribunal
In 2018, Christa Ackroyd Media Ltd, the personal service company of Christa Ackroyd, a TV presenter on the BBC show ‘Look North’, lost its First-tier Tribunal case against HMRC. There are some similarities with the case decision discussed above. The First-tier Tribunal reached its decision based on the degree of control the BBC had, exclusivity requirements and non-substitution clauses in the contract.
Ms Ackroyd appealed the decision and her case was heard at the Upper Tribunal earlier this year. That decision was published on 25 October, confirming that the Upper Tribunal has upheld the First-tier Tribunal’s decision.
The Upper Tribunal considered the issue of control in detail. It agreed with the First-tier Tribunal that the under the contract between the company and the BBC, the BBC had “explicit control over Ms Ackroyd in a number of important respects”. It also agreed that the requirement to adhere to the BBC’s Editorial Guidelines imposed on Ms Ackroyd was relevant in determining the degree of control the BBC had over her.
Other broadcaster IR35 cases
While HMRC seems to have been largely successful when challenging the employment status of BBC presenters, there have been several taxpayers’ wins in cases against other broadcasters.
In Canal Street Productions Ltd v HMRC, Helen Fospero, who works as a presenter for numerous broadcasters, was successful in her case against HMRC at the First-tier Tribunal. HMRC challenged her employment status concerning her work for ITV, including on the shows ‘Lorraine’ and ‘Daybreak’.
The Judge’s ruling concentrated amongst other factors on the “mutuality of obligation” test. It was found that under the terms of her contract there ITV was not obliged to provide her with work outside of the specified engagements, and that overall the factors pointed towards her being self-employed rather than an employee of ITV.
In Albatel Ltd v HMRC , Lorraine Kelly, presenter of ITV shows ‘Daybreak’ and ‘Lorraine’, owned Albatel Ltd which won its case against HMRC. The Tribunal found that Ms Kelly had retained sufficient overall control of her work that, if she had had a contract with ITV, it would not have been an employment contract. Kaye Adams, presenter of ‘Loose Women’, also had a favourable outcome in her case against HMRC.
In Kickabout Productions Ltd v HMRC , the Tribunal found the TalkSPORT presenter Paul Hawksbee would not have been an employee under a notional contract with the client. HMRC has registered its appeal for the case to be heard by the Upper Tribunal although the date of the hearing has not yet been announced.
Employment status and off-payroll working
These cases concern arrangements which pre-date the introduction of the off-payroll working rules to the public sector in April 2017. These rules have fundamentally changed the way public sector organisations, including the BBC, engage with contractors. It is now up to the organisation receiving the services to assess employment status and ensure PAYE is operated where the client assesses that the relationship is one of employment. However, the underlying law on employment status remains the same and therefore the ever-increasing body of case law is as relevant as ever, in law at least.
However, with the off-payroll working rules set to be extended to private sector employers exceeding a ‘small’ size threshold in April 2020, in practice it remains to be seen whether engaging organisations change their approach. The ongoing complexities and confusion, highlighted in the Paya and others case where not even the Courts could reach an agreement, may lead more organisations to try to bypass the status assessments altogether and apply ‘blanket’ employment status to all workers, which would have unfair consequences for many.