The IR35 enquiry into the tax affairs of Christa Ackroyd Media (CAM) Ltd started in 2011 and culminated in a First-tier Tribunal hearing in late September 2017 following Ms Ackroyd’s appeal. Considering whether the company was caught by the IR35 legislation, HMRC found that Ms Ackroyd was a disguised employee and issued determinations spanning the tax years 2008-9 to 2012-13, resulting in an IR35 liability totalling £419,151.
Christa Ackroyd was a TV journalist who had previously worked for ITV co-presenting the programme ‘Calendar’ alongside Richard Whiteley from 1990, until 2001 when she was offered a contract by Yorkshire BBC to present ‘Look North’ in a bid to improve its ratings.
The decision could have significant implications for other BBC presenters, who have also traded via their own personal service companies and are also facing appeals. The Tribunal however, played down the significance of this stating that;
“We understand that the present appeal is one of a number of other appeals involving television presenters and personal services companies. However, this is not a lead case as such.”
Also under appeal were expenses reimbursed by CAM Ltd for yearly Sky Subscriptions, which Ms Ackroyd claimed was necessary to keep abreast of current affairs.
The Tribunal notes indicate that Ms Ackroyd was rather defensive when submitted to questioning by HMRC;
“Ms Ackroyd’s evidence did, we think, reflect the fact that she is more used to interviewing than being interviewed…she was keen to highlight those features which she considered would help her case, occasionally at the expense of directly answering the questions being asked.”
Ms Ackroyd’s attitude seemed to have been borne out of a belief that she was used as a ‘scapegoat’ by the BBC, particularly towards the end of the contract when the BBC terminated CAM Ltd.’s contract due to the enquiry into its tax affairs. One can’t help but feel a little sympathetic towards Ms Ackroyd, given that the reason she set up her own limited company was because the BBC suggested that she do so. The tribunal acknowledged that;
“…it was the BBC who suggested that she should work via a personal service company …The BBC did not want her to be an employee and we also infer that that they did not want any potential liability for PAYE and national insurance if she were to be classified as an employee.”
Additionally, when the enquiry was opened in 2011, the exact nature of it was not clear as it was described in the opening letter as a ‘Check of Employer and Contractor Records.’ Ms Ackroyd therefore did not attend the initial meeting held in September 2011. When she did realise the seriousness of the enquiry, and did wish to meet with the Inspector dealing with the case, she was told that it was too late. By this time HMRC had seemingly collected the information they needed.
The test which featured most heavily in this case was control and particularly the right of control. Right of substitution was deemed irrelevant because the contract indicated that there was no right of substitution. Ms Ackroyd was named individually as the ‘Broadcaster’ and the contract expressly stated that the ‘Broadcaster’s obligations under the contract could not be assigned, transferred or subcontracted.’
The case therefore seemed to hinge on control and whilst it was accepted by the Tribunal that Ms Ackroyd could exert a degree of control over the work provided;
“We are satisfied that Ms Ackroyd had a high degree of autonomy in carrying out her work and in identifying the stories she wished to follow…”
This however was not enough, as ultimately the Tribunal concluded that the BBC had the final say over the work;
“We do not accept that Ms Ackroyd did have day to day editorial control over the work. That would have been inconsistent with clause 5 of the contract.”
“The contract is silent on the point but the context suggests to us that the BBC through the Editor, would have control over content given the BBC’s editorial responsibility…”
“…the Editor had the right on behalf of the BBC to decide which stories to cover and in what order. There was room for professional disagreement but we are satisfied that ultimately these were decisions for the BBC.”
Additionally, the BBC were quite restrictive over CAM Ltd working for other clients and asked Ms Ackroyd to give up writing a Newspaper Column for the Sunday Express. Ms Ackroyd did so and was given a payment of £40,000 to compensate for the loss of such work.
Also inconsistent with a contract for services, was that although the BBC were not obliged to use CAM Ltd.’s services, they were obliged to pay for the days contracted under the terms of the agreement, meaning that CAM Ltd could be paid without having actually provided any services. CAM Ltd was also provided with a £3,000 per year clothing allowance; somewhat inconsistent with a contract for services.
Interestingly, Ms Ackroyd’s co-presenter of ‘Look North’, Harry Gration, was offered a contract of employment after a 2-year freelance contract. No such offer was made to Ms Ackroyd, whose relationship with the BBC certainly seemed to become rather sour, once news of the enquiry came to, with the Head of BBC Yorkshire, Helen Thomas supposedly describing Ms Ackroyd as ‘toxic’.
Despite the Tribunal indicating otherwise, this will undoubtedly have ramifications for other TV professionals under enquiry. The case also raises an issue which was brought up recently in the Employment Status Consultation, which was whether automatic employment rights for contractors caught by IR35 should be introduced. In this case given that the BBC suggested that a personal service company be used to avoid employment obligations, they must surely be held accountable to some extent.
You can read our full case study on CAM Ltd vs HMRC 2017 here.
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