[Editor: A breaking news story, investigated and published by ContractorCalculator. Published Friday 7th October at 10:30am. Subsequently reported by the FT, Telegraph, BBC, The Times, Daily Mail, Independent, ITV, Express, Mirror, Sun, Sky News, Huffington Post, and the Guardian]
More than 100 BBC presenters who used personal service companies (PSCs) before joining the corporation’s payroll could face huge amounts in back taxes after details emerged of a large scale IR35 clampdown by HMRC.
It is also claimed that the taxman intends to initiate IR35 proceedings in relation to presenters who are engaged by other broadcasting organisations, substantially widening the scope of their investigations.
News of HMRC’s latest public sector witch-hunt broke following the publication of details of a recent tribunal hearing, Paya Ltd and Tim Wilcox Ltd v Revenue and Customs, involving presenters Joanna Gosling and Tim Willcox.
Gosling, notably, is the ex-wife of Craig Oliver, who spent more than five years as director of communications for David Cameron, who famously made tackling tax avoidance a key part of his economic plan whilst in Downing Street.
IR35 cases could set precedent in broadcasting industry
Emphasising the significance of the case, in the ruling transcript the BBC acknowledged: “The appeals are likely to be the first cases to test the freelance model in the broadcasting industry against the IR35 legislation.”
The tribunal case itself doesn’t concern the IR35 decision, but rather the BBC’s application to provide evidence as a non-party. However, as ContractorCalculator CEO Dave Chaplin notes, the revelation that the taxman has been playing particularly close attention to the BBC won’t surprise many:
“We know HMRC has been supplied with lists of PSC-users by multiple public sector organisations – it appears that many contractors have been reported to the taxman by their clients. This case demonstrates both that HMRC is clearly ramping up is investigations into one person companies, and that some public sector clients are trying to influence the results.
“It seems that some BBC presenters are being used as high profile examples which could be damaging to genuinely self-employed independent professionals who trade via PSCs,” he adds. “It seems like the witch-hunt goes on as more presenters are put in the firing line.”
Tribunal reveals sharp rise in HMRC IR35 enquiries
Gosling and Willcox came before tribunal, both having engaged with the BBC through their PSCs over the past decade. Individual enquiries led HMRC to decide that Gosling’s engagement from 2007-2012 fell within IR35, whilst Willcox was caught from 2006-2013.
However, the two presenters are far from being the only ones on the taxman’s radar. In her witness statement, the BBC’s Head of Global Mobility and Employment Jennifer Henderson reveals the true scale of HMRC’s clampdown.
After being told that the taxman was considering 23 cases in May 2015, Henderson told the court that HMRC had informed her that this number had ballooned to 469 just two months later, with 80 enquiries opened. By autumn 2015, the number of enquiries had risen to 100.
HMRC plans to target other broadcasters
Henderson added: “HMRC is staying other appeals behind these ones, thereby giving the impression that these proceedings will effectively be treated as test cases.”
The BBC also claimed that the taxman had indicated its intention to initiate IR35 proceedings in relation to presenters who are engaged by other broadcasting organisations, substantially widening the scope further.
However, any hopes HMRC may have had of the outcome of these appeals setting an example for future cases were quashed by tribunal judge Anne Redston, who noted that the outcome of the tribunal will not set a precedent for future cases:
‘The outcome of the Appellants’ appeals will not be determinative of other appeals made by different BBC presenters, who will need to put forward evidence in relation to their own position.’
Statement from the BBC
A BBC spokesperson told ContractorCalculator: “As the judgement says this is an industry wide issue and affects those who have been engaged in this way for a number of different organisations. The exact number of cases that will be taken forward will be determined by HMRC.
This particular tribunal relates to tax issues between 2006 and early 2013 and not the present day. It is up to individuals to ensure they pay the right tax, and since 2013, the BBC has adopted a new employment status test that provides a clear and consistent approach to the employment status of journalists and presenters.”
Are you at risk from IR35?
This latest witch-hunt shows that you can never be too cautious when it comes to protecting your IR35 status. If you’re concerned that you might fall within the legislation, you can use ContractorCalculator’s online IR35 test.
“We have the most accurate online IR35 assessment tool available,” Chaplin concludes. “I would urge anyone, including freelancers working for the BBC and other broadcasters, to take our test for peace of mind.”