Another IR35 loss for HMRC

Atholl House Productions Ltd v HMRC

We recently commented on the IR35 case lost by HMRC concerning the ITV presenter, Lorraine Kelly. This week, HMRC have added to their tally of losses as the First-tier tax tribunal (‘FTT’), have handed down their judgment on the IR35 case pursued by HMRC against BBC radio presenter Kaye Adam’s company, Atholl House Productions Ltd (‘Atholl’).

This case is the third consecutive IR35 case appealed to the Tribunal which relates to a broadcasting channel, with HMRC losing two of the three appeals (although the remaining case has been appealed further).

Ms Adams presented a radio programme called “The Kaye Adams Programme” on BBC Radio Scotland, however, she is most notably known for her appearances on ITV’s programme, “Loose Women”. HMRC determined that IR35 applied to her working arrangements with the BBC and raised assessments for four tax years, however Atholl only decided to appeal the tax and NIC liability for two tax years which amounted to more than £134,000.

Whilst many of our readers will be familiar with the IR35 legislation, as a brief reminder, IR35 is a specific tax law which applies when an individual personally provides services to a client through an intermediary (typically, although not necessarily their own personal service company). IR35 applies where the circumstances are such that, if the services had been provided under a contract directly between the individual and the client, the relationship would have been one of employment.

Determining whether a relationship is one of employment or not can sometimes be a tricky matter (even HMRC struggle with determining this, as evidenced by their poor IR35 track record). Nevertheless, each case needs to be determined on its own facts.  This is key for any such determination being made and this was highlighted by the FTT in this case when it contrasted the facts of this case with that of Christa Ackroyd who also provided services to the BBC through her company (and who lost her IR35 appeal in the FTT).

In order to determine employment status, several factors need to be considered, however, the key factors derived from the seminal case of Ready Mixed Concrete are:

  • whether the individual is required to provide their personal service
  • whether there are sufficient mutual obligations to offer and to accept work
  • whether the individual is subject to a sufficient degree of control to be an employee
  • whether the other provisions of the contract are consistent with it being a contract of employment.

It is important, first of all, to obtain all of the facts of the case and then, based on the facts as a whole, make a decision on the nature of the relationship between the parties. This point was discussed at length by the FTT in this case.

HMRC, as with the Lorraine Kelly case, sought to rely on the contractual terms only. They argued that when determining status, the contractual terms agreed should be treated as forming part of the actual contract even if a right was not exercised in practice. The only instance in which the term could be disregarded is if the term was a sham or was an unrealistic possibility.

Atholl, however, relied on the witness evidence of four individuals, which included Ms Adams. They argued that it was necessary to consider all of the evidence to determine whether a right which was set out in the written agreement was in fact a true term of the actual agreement.

The FTT considered previous case law, including the Supreme Court’s decision in Autoclenz, and agreed with Atholl, that in a contract concerning work and services, whilst the starting point includes looking at the written agreement, the Tribunal must examine all of the relevant evidence.

Based on the evidence provided, the FTT determined that:

  • there was a personal service obligation on Ms Adams – whilst the contract provided for a right of substitution in exceptional circumstances, the witness evidence showed that a substitute would not be accepted;
  • there were sufficient mutual obligations – the contract set out a minimum contribution (160 programmes) and a minimum fee; if the BBC did not require Ms Adam’s services for the minimum contribution, then the BBC would still be obliged to pay the minimum fee; and
  • the BBC had the right of control over the content of the programme despite only a ‘light touch of editorial control’ being exercised in practice.

Importantly, the FTT determined that the other provisions of the contract were not consistent with it being a contract of employment.

Ms Adams had built her own reputation and brand which she managed in a way to increase her profile with the public. She provided services to other media organisations, wrote two books and she spent a ‘meaningful’ amount of time on her other engagements. Overall, the other engagements and work carried out was not insignificant.

The contract with the BBC required her to obtain the BBC’s consent for other engagements and placed certain restrictions on her ability to do so. However, based on the evidence presented, the FTT found that the BBC did not have the right of first call on the services of Ms Adams and she was not required to seek the prior written consent of the BBC before taking other engagements. The BBC could not control the content of the other engagements and she was free to enter other arrangements as she wished.

Furthermore, the FTT observed that ‘in the current age of flexible working’ when employees often work from home, the use of their own equipment alone is no longer a potent indicator of employment status. However, Ms Adams had no access to the BBC’s systems when working from home which, the FTT found as being inconsistent with an employment contract. She further occasionally used her own equipment when providing services to the BBC.

The FTT also emphasised that the provision of holiday pay, sick pay, maternity pay and an entitlement to a pension are common features of an employment contract and stated that the absence of these things from a contract would generally be regarded as being inconsistent with employment. Ms Adams did not have any entitlement to holiday pay, sick pay, maternity pay nor to a pension and was treated differently from the BBC’s employees in relation to reviews, job specification changes, and not having the ability to be able to apply for jobs internally.

Overall, based on the above, the FTT concluded that IR35 did not apply in this case as the hypothetical contract between Ms Adams and the BBC would be a contract for services (i.e. a self-employed contract).


This case, along with the recent IR35 cases we have seen, highlights the potentially complex nature of determining employment status.  In some cases, as in the present one, a nuanced approach is required which involves standing back and looking at the overall picture: something which HMRC’s online CEST tool completely fails to do.  As the CEST tool underpins HMRC’s approach to IR35 and, in particular, the proposed April 2020 reforms this further loss is likely to put another dent in HMRC’s confidence over IR35.

If you would like any advice on IR35 or employment status, please contact the Chartergates Team.

Published: 05.15.19 - Posted In: Latest News