The highs and lows of IR35

In the past couple of weeks, we have seen the outcome of two high profile cases concerning IR35 hit the news - one won by HMRC and one lost.

Last week we saw one of the most high-profile defeats for HMRC to date regarding the IR35 legislation as Gary Lineker won his battle over a £4.9 million tax bill. In this case, HMRC had asserted that Gary Lineker was an employee of both BBC and BT Sport, but the Tribunal held that he was a genuine freelancer, who operated via a partnership, and that the IR35 legislation did not apply to Lineker.

IR35 is a complex matter, and HMRC’s view of an individual’s employment status is only their view and they do not hold a monopoly on wisdom. The fact that they lost this case (subject to any appeal of course) demonstrates that they are not always right.

On the other side of the coin, HMRC had a better result only a few days after the Lineker news emerged – winning the appeal that TV presenter Eamonn Holmes had brought against the first-tier Tribunal’s finding that IR35 applied to his work for ITV.

Holmes had operated via his limited company in providing his services to ITV and has argued throughout this litigation that he was an independent contractor in business on his own account, and that he was not subject to ITV's instructions or in receipt of any employee benefits. The first and now Upper-tier Tribunals concluded that whilst the contract between his limited company and ITV purported to show he had independence, it would have been "career suicide" for him to disagree with ITV decisions and that in reality, ITV exercised control over him.

Holmes now faces a substantial tax bill, but it is important to remember that cases such as this one were commenced before the 2021 change in the IR35 system. It is likely nowadays that ITV would be the ones pursued by HMRC, rather than the individual contractor, and it is for that reason that end-users of contractors need to be very clear on their legal position and the options available to them.

So, once again, the complexities of IR35 and issues of employment status rear their head. For advice on these complicated matters, contact our Employment Team - who specialise on advising on IR35 matters and the disputes that arise from them - at Leathes Prior via hgill@leathesprior.co.uk or call 01603 610911.