HMRC have opened an enquiry into over 100 BBC presenters who are currently, or have previously been paid through their own Personal Service Companies (PSC). This was revealed in a tribunal ruling involving BBC presenters Joanna Gosling and Tim Willcox, and HMRC.

The BBC have revealed that the case relates to whether Willcox and Gosling were eligible to pay tax as freelancers through their own personal services companies or should have applied legislation known as IR35, as employees. The pair have appealed against the extra tax and National Insurance contributions which HMRC decided were due.

Employment status is never a matter of personal choice…

The appeals are thought to be extremely important not only to the individuals in question but also to the BBC and to the broadcasting industry as a whole. As said by the BBC, “the appeals are likely to be the first cases to test the freelance model in the broadcasting industry against the IR35 legislation.”

According to HMRC, employment status is never a matter of personal choice and is always dictated by the specific facts.

Their spokesperson continued: “When the employment relationship does not accurately reflect the underlying reality of the relationship, the wrong tax is paid then we intervene to ensure the rules apply as Parliament intended.

While there can be many legitimate business reasons for workers being employed through their own companies, there are rules in place enabling HMRC to make sure people who provide their services in this way pay the right tax and National Insurance.

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.”

IR35 experts’ opinion

According to Bauer & Cottrell, IR35 specialists, the court ruling relating to the appeals of two BBC newsreaders against the Intermediaries legislation is a rare example of how IR35 cases should be determined: “The tribunal judge rightly prioritises “what actually happened” when the newsreaders worked”, says Kate Cottrell, the director of Bauer & Cottrell.

Following the actual over the theoretical, the judge explained that guidelines the BBC operates would only be useful to determine status if they depict the actual working realities of the two newsreaders: “Evidence about how the Editorial Guidelines were intended to operate is likely to be very much less valuable than evidence as to how the Guidelines were in fact applied”.

Bauer & Cottrell admitted to have some recent cases where HMRC has issued formal demands based upon generic information [on working practices], even though B&C had already provided, in the form of a signed confirmation of the working arrangements, from a person who did know the contractor and did know the reality of the working practices and whose evidence is in conflict with the generic evidence.

Ms Cottrell added that the “BBC judgement reminds everyone that an individual has the freedom and the right to put their cases — based on their own individual facts — to the tribunal. Paragraph 256 of the judgement spells it out perfectly:

“‘The Tribunal is concerned with the Appellants’ appeals against specific tax and NICs decisions. The outcome will not be decided based on a generic view of how newsrooms operate, or how the BBC’s Editorial Guidelines are intended to be applied, but instead on the particular facts of the Appellants’ cases.’”

Kate Cottrell is the director of Bauer & Cottrell, our preferred IR35 specialists. Kate was also on the Office of Tax Simplification (OTS) team tasked with the recent review of IR35 and sits on the IR35 Forum which is advising on and monitoring HMRC’s improvements to IR35. Our Essential IR35 and Plus accountancy packages include unlimited IR35 reviews with Bauer & Cottrell and all K&B clients are entitled to 30 minutes free initial consultation with them.