HMRC first victory in nine years - IR35 for £419,000
This the case against Christa Ackroyd of HMRC will likely have implications for similar cases as well as future expansion of the legislation
Ms.Christa Ackroyd - Former BBC presenter is facing a tax bill of over £419,000 after a tax tribunal ruled in favour of HMRC, in the culmination of a five-year dispute surrounding her contractual arrangements and employment status.
Case HMRC vs Ms. Christa Ackroyd
Ms. Ackroyd had worked as presenter of the BBC’s Look North programme for 10 years, whilst her salary was paid via her personal service company (PSC), Christa Ackroyd Media Ltd (CAM) incorporated in 1999. The arrangement was structured as a self-employed contractor and circumvented paying income tax and National Insurance Contributions (NICs).
HMRC challenged her status as a contractor and referred to her as an employee, which the honourable judge accepted on the principle that Ackroyd was effectively under a “hypothetical contract”. The core reason for believing her as an employee rather than being self-employed was she has her role was continuous and steady with BBC under her limited company. Whereas Ms. Ackroyd was persistent that she has signed the contract with BBC in good faith as a freelance, whilst BBC spoken person stated that use of personal service companies was “standard industry practice” at the time.
Impact of this case
Following this case, the private business which currently engages individual contractors via intermediary companies will need to assess whether those individuals are likely to be found to be employees of the intermediary company
It should be noted that HMRC has a right to investigate accounts of individual up to 6 years however it can even investigate more than 6 years with an authorization of the court.