Another high-profile IR35 defeat for HMRC

Another celebrity presenter has defeated HMRC in an IR35 case giving a further high profile, embarrassing loss to the tax man in Tribunal cases.

Talksport presenter, Paul Hawksbee, has defeated HMRC in an IR35 tribunal carrying around £140,000. This follows several other television and radio presenters who have been subject to challenge by HMRC for hundreds of thousands of pounds in what HMRC saw as a 'disguised employee' payment rather than earnings through their own company.

In the past few months TV presenter Lorraine Kelly fought off a £1.2 million tax demand by claiming that she was 'a brand' instead of an ITV employee; and Loose Women and radio presenter Kaye Adams, won a similar case against HMRC despite the tax authorities trying to argue she was an employee of the BBC, rather than a freelancer.

Now, Paul Hawksbee has successfully argued that he is in business in his own right - rather than an employee of the radio company.

He has been presenting the Hawksbee and Jacobs Show with Andy Jacobs for nearly 20 years since the radio station's inception in 2000. HMRC argued that 90 per cent of his income in the past four years came from this show and made the case that this effectively made him Talksport's 'employee' and liable for Income Tax and National Insurance Contributions as an employee.

Paul Hawksbee, who operates through a limited company, Kickabout Productions Ltd, countered that he is primarily an independent comedy script writer and that his work for Talksport was 'just one string to his bow'.

The Tribunal also heard that Hawksbee gets no holiday or sick pay, pension or paternity leave. He receives a fee for each show, with no retainer or bonus.

Judge Scott handed victory to Hawksbee in the Tribunal case saying that the show owes its success to the 'humour and originality of Paul and Andy' and that 'they have freedom to decide on the format and content of each show and, subject to availability, the guests for each show'.

Disconcerting

Seb Maley from contractor tax specialists, Qdos, said: "While the result is positive news for Mr Hawksbee, it's hugely disconcerting that as the creators and enforcers of IR35, HMRC still cannot seem to grasp the legislation it insists on reforming.

"This case raises serious questions about HMRC's understanding of particular aspects of IR35, with the taxman claiming that all three key status tests pointed to employment. Ultimately, the judge disagreed and the issue of mutuality of obligation – which is completely absent from CEST – was a key factor.

"The fact that Mr Hawksbee's engagement would almost certainly be deemed inside IR35 by HMRC's IR35 tool is yet another indication that it is not fit-for-purpose, despite having been in operation for over two years.

"HMRC has every right to investigate a contractor's tax status, but it must have a compelling case against them. By challenging individuals who are genuinely self-employed, HMRC places these people under unnecessary financial and emotional pressure.

"With reform to IR35 in the private sector approaching fast, it's vital that HMRC thinks long and hard about how it enforces IR35 compliance."