HMRC has suffered another loss in an IR35 case worth £1.2 million against a TV Presenter, Lorraine Kelly at the tax tribunal yesterday.
HMRC had brought a case against Ms Kelly under IR35 legislation and a crackdown on personal service companies, that she had been using to manage her earnings.
The case focuses mainly on a contract that Miss Kelly had signed in 2012, through a company she runs alongside husband, presenting herself on the show ‘Lorraine’.
She then received a tax bill of nearly £900,000 in income tax and over £300,000 in national insurance contributions in 2016 in which she successfully appealed against the tax authority HMRC, where the case was heard by the first-tier tax tribunal.
So what did the judge say about her ruling?
HMRC argued that Ms Kelly should have paid Income Tax and National Insurance contributions, as the nature of her work for ITV meant she was effectively an ’employee’.
But Ms Kelly successfully argued that she was a freelancer, saying that she decides her own hours, what items should be included in the show and when she works as well as not receiving any sick pay or a pension, and there is no guarantee that her contracts would be renewed.
In Kelly’s ruling, Judge Jennifer Dean said: “Ms Kelly presents a persona of herself; she presents herself as a brand, and that is the brand ITV sought when engaging her”, as well as the tribunal found that Kelly did not receive staff benefits such as holiday or sick pay and was allowed to carry out other work.
The judgment concluded:
“The relationship between Ms Kelly and ITV was a contract for services and not that of employer and employee.”
The ruling could have an effect on hundreds of presenters from the BBC and elsewhere who are currently being pursued by HMRC under IR35 legislation.
A spokesman for HMRC said it was “disappointed” with the ruling.
Further information on the judgement can be found here.