In another blow for HMRC, presenter, Lorraine Kelly, has won her IR35 case and is off the hook for £1.2m in income tax and national insurance contributions. The disparity between the advice that is given out as standard to businesses when working with freelancers, and the reality of the rules as evidenced in recent tribunal decisions, looks greater than ever and criticism has come in from all sides.
Deputy Director of Policy at the Association of Independent Professionals and the Self-Employed, Andy Chamberlain, described HMRC as "completely in the dark about their own tax legislation."
Meanwhile, BDO's partner in charge of tax dispute resolution, Dawn Register, questioned HMRC's approach to whole area of IR35 litigation, pointing out that while they claim only to pursue cases to litigation where they have a good chance of winning, they have in fact lost 80% of IR35 tribunal decisions in the last year.
So why did the judge, Jennifer Dean, decide that the contract between Kelly and ITV did not constitute an employment contract? The answer includes several features of the relationship that may be useful in considering other cases:
- There was little or no control or supervision over Kelly.
- Kelly was only required to work 42 weeks of the year and had a key role in identifying guest presenters for periods when she wasn't there. In effect she had a right to provide a substitute.
- She wasn't entitled to holiday or sick pay or pension.
But in some ways the most interesting part of the decision was the distinction between Lorraine Kelly the person, and 'Lorraine Kelly' the brand. Judge Dean found that she presents a persona of herself – a brand – and that it was that brand that ITV sought when engaging her. Teetering on the brink of absurdity, she added,
- "We should make it clear we do not doubt that Ms Kelly is an entertaining lady but the point is that for the time Ms Kelly is contracted to perform live on air she is public 'Lorraine Kelly'. She may not like the guest she interviews, she may not like the food she eats, she may not like the film she viewed but that is where the performance lies."
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