TV presenter, Lorraine Kelly appealed against HM Revenue and Customs (HMRC) at a First Tier Tribunal (FTT) over a £1.2 million demand for unpaid income tax (£899,912) and National Insurance Contributions (NICs) (£312,615).
The appeal arose from a challenge to her employment status under IR35, claiming that Lorraine Kelly was working at ITV Breakfast Ltd during the relevant period.
An off-payroll working through an intermediary (IR35) is a tax legislation that is designed to combat tax avoidance by workers supplying their services to clients via an intermediary.
For example, if a worker is involved in off-payroll working when they work for a client through their own intermediary, but would be an employee if they were providing their services directly.
Thus, meaning for this case if this would have been a contract of service, the company would need to account for income tax and NICs, as Ms Kelly was effectively an employee of ITV.
This claim, however, was appealed, on the basis that the nature and range of Kelly’s work meant she should be treated as self-employed.
Within the case, she argued she does not receive sick pay or a pension, she chooses her own hours and ultimately there is no guarantee that her contracts would be renewed.
Furthermore, ITV is under no obligation to pay Kelly if she is unable to present the show and any additional appearances have separately negotiated contracts.
The tribunal decided that the relationship between Kelly and ITV was a contract for services and not that of employer and employee, and therefore the case was found in her favour.
Andy Chamberlain, Deputy Director of Policy at the freelancer body IPSE, said: “What this judgement hammers home irrefutably is that HMRC is completely in the dark about their own tax legislation.
“Lorraine Kelly’s case is the fourth of five IR35 cases that HMRC have lost since 2018.”
Mr Chamberlain added: “The Government, however, has said that from April 2020, private businesses across the UK will have to determine the IR35 status of their contractors.
“This judgement should be a wake-up call to the Government that it cannot expect businesses to understand a tax law that it cannot even implement itself.”
A spokesperson for HMRC said: “We are disappointed that the FTT has decided that the IR35 did not apply in this case. Moving forward, we will carefully consider the outcome of the tribunal before deciding whether to appeal.”