Anyone with half an eye on IR35 news at the moment will see multiple stories filtering through.
These relate to HMRC’s big wins in IR35, challenging those it feels have incorrect assessment under IR35.
Case #1: Talksport presenter, Paul Hawksbee
The most recent of these is the £140,000 tax case against Talksport presenter Paul Hawksbee. Hawksbee appealed a 2020 Upper Tribunal decision but was unsuccessful.
This ruled that work he completed at Talksport from 2012-2015 did fall under IR35 and therefore tax and national insurance had been charged incorrectly. In fact, the deficit was £89,758 of income tax and £53,368 of national insurance.
When this case went to the original First Tier Tribunal, they found in favour of Hawksbee. However, the HMRC appeal was upheld by the Upper Tribunal.
Case #2: McCann Media Ltd
The second case also revolves around the status of IR35. This time with McCann Media Ltd, for Neil McCann. Two of his contracts covering periods from 2014-2017 while working at Sky came under HMRC scrutiny. HMRC deemed these to be wrongly determined under IR35 and the amount in the appeal was £210,000.
It was decided that his contract was actually one of employment, and the appeal by McCann was unsuccessful. Dave Clark, also from Sky Sports lost his case against HMRC for work from 2013-2018. In this case, reports suggest that very little evidence was offered in support of the originally claimed IR35 status.
More IR35 Cases in Scope for HMRC
These are all high-profile cases for HMRC that went their way, but none of the claimants are at all pleased with the way the rulings have gone. Mind you, this is hardly surprising.
Yet there is further unrest coming in the direction of HMRC at the moment. This time it is from Eammon Holmes who has been fighting a case since 2018 relating to his earnings from ITV. He hit out on live television calling HMRC “the department of thievery”.
The segment was to be about non-dom tax status, but became rather more personal. His tax bill for this issue is £250,000. He described a lack of consistency in the tax rules and people being hounded for money they do not have.
The situation may have led to unrest, but this is inevitable from those who are being pursued. HMRC have said there is no plan to target specific sectors, but even if this is the case now, it may not be in the future. They have said there are over 200 media-related cases they have taken forward and they have already successfully challenged half.
As the first year of IR35’s extension to medium and large businesses is over and the soft-landing is finished, can we expect to see an increase in cases like this? Well quite probably. We will just have to see who decides to vent their frustration next, as no doubt there will be more.
Will you pass an HMRC IR35 enquiry?
Take our 5 minute online IR35 risk assessment to find out
HMRC’s soft landing period has ended and IR35 enquiries will soon begin in the private sector. Make sure you identify any risk areas and ensure you’re managing it correctly.
Petition Launched Against Preferred Suppliers Lists
Most people who work in a larger organisation know what a Preferred Supplier List, or PSL is.
You want to buy something – perhaps design services for a brochure, or flights or something mundane like stationery. You think you can just go online and order from wherever you like, but this is not the case. For most things, if there is a PSL in place then you must use one of these places.
They have usually tendered to the organisation in some way and offered some kind of good discount and guarantees. They were chosen, usually along with a few others, and now they make up a PSL.
However, it does not necessarily mean that they sell the scissors or hotel room or 100 business cards any better or cheaper than the place online that you particularly wanted to use. Yet, exclusivity agreements have been signed and you do not have a choice.
Now imagine you are a contractor coming to work for a new organisation. They funnel staff through a particular recruitment agency. This is not unusual, many organisations do it. The recruitment agency has a PSL agreement with certain umbrella companies for contractors.
The recruitment agency gives you an ultimatum. You can either work for them under one of those set umbrella companies or you do not get to work with the client at all. That is the reality facing some contractors in the UK.
One of these, an IT contractor called Paul Sheraton has set-up a petition against this. He objects to having to use an umbrella company he does not want to use and does not trust. Furthermore, he believes that limiting free choice is a breach of the Conduct Regulations.
Some feel it is reasonable for recruitment agencies to hold a limited list of umbrella companies. They point out that agencies hold much liability, so this is a reasonable measure.
However, others speak of grey areas where an umbrella company might pay a recruitment agency to be on their PSL list. This may lead to increased chargers for the contractor. Then due to lack of choice, higher rates cannot be avoided.
Recently a businessman who helped businesses gain lucrative contracts with organisations has been found guilty of bribery. He had taken £1.5million in bribes as he ‘influenced’ boards to accept companies that had paid him, given him tickets to events and more. This is the first successful charge by the Crown Prosecution Service of this nature. Sadly, it is unlikely to be the last.
As to the petition, even if it does nothing else, it is good to highlight the practice going on. It is not necessarily bad practice at all. It could be that the umbrella companies are good quality. They may be robust, fair and offer a vital service.
Yet it is also possible something happened along the way that makes it not so fair to the contractor. Either way Paul Sheraton believes he should have the full choice of umbrella companies he wants to use. After all, it stands to reason that if he has already worked with an umbrella company he trusts, that he should be free to work with them again – watch this space.