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Lorraine Kelly wins £1.2m IR35 Case

Lorraine Kelly in Control: Latest Tribunal decision demonstrates it was “Lorraine” who had the final word…

Another high profile IR35 Tribunal determination has recently been released. The case relates to the provision of services by TV presenter, Lorraine Kelly. The appeal was heard in November 2018 and relates to determinations issued by HMRC totalling £1,212,527.

The contracts in question were for work undertaken by Lorraine Kelly (via her personal service company, Albatel Ltd), as a presenter on TV programmes “Lorraine” and “Daybreak” from 03 September 2012 to 10 April 2014 ,and as a presenter on ‘Lorraine” between 11 April 2014 to 15 July 2017.

HMRC’s defence of their position, covering each of the main status issues, was as follows;

 

Mutuality of Obligation

The agreement provided a period of work consistent with employment and time off for holidays was factored in to the contractual period. Ms Kelly was obliged to work if requested by ITV but would be paid even if she did not undertake the work covered by the contract.

Control

HMRC accepted that Ms Kelly was skilled and talented in her field, but that this did not mean that she could not be an employee;

“HMRC do not question Ms Kelly’s talents as a presenter but highlight that it is entirely feasible for a skilled person (such as surgeon or professional footballer) to be an employee…HMRC submit that what matters is where the right of control lies, which would undoubtedly be with ITV under the hypothetical contract.”

Similarities with this case and the Tribunal case heard in September 2017 involving Christa Ackroyd (a former presenter on BBC’s Look North programme) were of course highlighted. Christa Ackroyd who operated through her own company CAM Ltd was found to fall inside of IR35 following appeal, and one of the main reasons for reaching this decision was that there was a right of control over the work because the services were always subject to the BBC’s Editorial Guidelines.

Personal Service/Right of Substitution

HMRC asserted that personal service was a requirement of the contract and that Ms Kelly would not have had complete flexibility over providing a substitute - “The final choice for a substitute was that of ITV.”

Despite HMRC’s arguments and its reliance on Ready Mixed Concrete and the fairly recent case involving Christa Ackroyd (CAM Ltd), the appeal was allowed, and the case found in favour of Ms Kelly. The main reason for this appears to be the level of control exercised by Ms Kelly over the services she provided to ITV.

HMRC were criticised somewhat for failing to take into account the other work Ms Kelly undertook for other clients. It was also highlighted by counsel for Ms Kelly (Albatel Ltd), that when Ms Kelly did go on holiday, “Ms Kelly was instrumental in identifying substitute presenters…”

In relation to control, and in particular in contrast to the Christa Ackroyd case, Ms Kelly’s counsel stated that;

“ITV has nor right to tell Ms Kelly or Albatel what to do which distinguishes the present case from Christa Ackroyd in which the BBC could direct Ms Ackroyd to present any programme of their choice whereas the Appellant’s contract is no more than a contract for specific services, akin to that provided by any self-employed individual.”

In support of the control issue it was stated that the role of OFCOM as the regulator of ITV was irrelevant as it applies to everyone in the industry. Ms Kelly can choose how long an interview might last and may even choose not to follow certain scripts and is able to determine who she interviews. Additionally, Ms Kelly can choose when to take time off, she is not considered to be part and parcel of ITV and can work for other broadcasters.

In summary it was argued that, “LK drives and controls her services and essentially she drives the programme. It is up to her how she presents and the subject matter…LK is not bound by ITV’s code of conduct which is for employees…They (ITV) couldn’t do anything LK didn’t believe in…LK drives the ratings…If there was no LK there would be no show.”

Based on the evidence it was accepted by the Tribunal that there was a requirement for personal service and that mutuality of obligation was present; both pointers to employment. However, it was accepted that there was a lack of control over the services and that control lay with Ms Kelly. The Tribunal also concluded that Ms Kelly was in business on own account and that the intention of the parties was never intended to one of employment. On this basis the appeal was allowed, and it was accepted that the contract was one of services.

HMRC’s success with CAM Ltd early last year would certainly have given them a degree of confidence in defending this case, however they failed to recognise the differing degrees of control in both cases, choosing instead to focus on the similarities.

For contractors this is another piece of good news, especially due to the lack of focus on personal service and being able to provide a substitute which for many is the status test which presents the most difficulties. It is a further case which stresses the importance of control, and in contrast to the case of CAM Ltd, is a useful example of what sufficient control over the services should look like.

By:Kate Cox

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