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March 29, 2018
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Ackroyd v HMRC - Nothing Personal

In the case of Christa Ackroyd Media Ltd v HMRC, the First-Tier Tribunal found the that the former ‘Look North’ presenter Christa Ackroyd would have been an employee of the BBC, had she been providing her services directly, rather than through her personal service company (PSC), resulting in additional income tax and national insurance contributions (NICs).

Background

Ms Ackroyd worked at the BBC as a presenter for ‘Look North’ on BBC 1, pursuant to two fixed term contracts between the BBC and her PSC, Christa Ackroyd Media Ltd, from May 2001 to June 2013.

The intermediaries legislation (also known as IR35) was introduced to prevent individuals from providing employment services to clients through an intermediary (e.g. a limited company or a partnership) in order to avoid or PAYE and NICs.

HMRC made determinations for tax against Ms Ackroyd covering the tax years 2008/09 to 2012/13, totalling £419,151. The determinations were made on the basis that a hypothetical contract of services existed between Ms Ackroyd and the BBC, rather than a contract for services between her PSC and the BBC.

The Case

In determining whether the IR35 rules apply, the Tribunal considered a hypothetical contract between the BBC and Ms Ackroyd. A number of factors were reviewed that could indicate whether Ms Ackroyd was employed or self-employed. Some key factors included:

  • Control - the level of control that the BBC had over what work was done, the way that it was done, and the time and place in which it was performed;
  • Mutuality of obligation - the obligation of the BBC to provide and pay for work, and the obligation for Ms Ackroyd to accept the work;
  • Length of contract -  the longer the contract the more it would indicate employment; and
  • Right of substitution - whether another person could be sent in place of Ms Ackroyd.

It was found that the BBC had overall control of Ms Ackroyd's work, how it was done, and where her services were provided. She was required to work at least 225 days per year and could not provide a substitute.  The contract length of seven years was also considered significant.

On balance, it was found that the hypothetical contract that existed between the BBC and Ms Ackroyd was one of employment, and so additional tax and NICs liabilities were due.

What Next?

This appeal is one of a number of appeals involving television presenters and PSCs and highlights the important fact that whilst there may be tax and NIC advantages for working through intermediaries there are also risks depending on the nature of the relationship with the end client.

The work of BBC presenters has also made headlines for the other risks that come with working through intermediaries or as a self-employed worker.  Providing work through these types of arrangements will normally grant fewer rights and benefits to the worker (e.g. sick pay and holiday pay) than compared working as an employee.

If you have any doubts or queries regarding your employment status or providing services through your limited company, please contact a member of our team for a no-obligation chat.

Contact us today to discuss your tax requirements.
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