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HMRC suffers damaging IR35 tribunal defeat ahead of reform

Presenter Kaye Adams wins IR35 tribunal carrying over £124,000 in tax liability 

The well known freelance broadcaster, Kaye Adams, has successfully defended her IR35 position at the Upper Tier Tribunal (UTT), which upheld a 2019 First Tier Tribunal (FTT) decision to deem the Loose Women host as genuinely self-employed and therefore outside of IR35.  

The case, which carried over £124,000 in tax liability, focused on the contracts held by Ms Adams’ personal service company, Atholl House Productions Ltd, with the BBC in the 2015/16 and 2016/17 tax years for her work hosting ‘The Kaye Adams Programme’ on BBC Radio Scotland.  

HMRC took the view that the FTT had made several mistakes in 2019, most notably that the BBC exercised sufficient control over Ms Adams and Mutuality of Obligation (MoO) existed to the degree where she should have been classed as an employee for tax purposes. 

But while it was accepted that the television host provided a personal service (but could provide a substitute in “exceptional circumstances”), that the BBC held a “high degree of editorial control” over the delivery of the work and that MoO was also present, the Judges dismissed HMRC’s appeal. 

The reasons? Having reviewed Ms Adams’ written contracts with the BBC and the actual working practices, the UTT upheld the FTT verdict on the grounds that Ms Adams was in “business on her own account” and had been working compliantly outside IR35. 

This was largely due to the presenter having multiple clients (including presenting Loose Women, working with Sky and writing newspaper and magazine columns), which gave her more than one source of revenue. 


What does this result mean for contractors?

The case could be viewed as a significant victory for all contractors, not just Kaye Adams.

It offers hope to the many other media freelancers who are also subject to ongoing IR35 investigations and whose contracts bear the hallmarks of a typical outside IR35 engagement - in contrast to Ms Adams who, due to the nature of her engagement with the BBC, didn’t have full autonomy over her work and could not freely provide a substitute as and when she wanted. 

For traditional contractors, whether working in technology or oil and gas, this case is evidence that having multiple clients and operating as a true business contributes towards outside IR35 status - albeit not usually a definitive factor. 

Contractors should also take comfort from the fact that Ms Adams’ contract is likely to be vastly different from the majority of independent professionals working outside IR35 - with many of these individuals benefiting from a legitimate substitution clause, autonomy over how they deliver their services and without any mutual obligation to work for their clients at all. 


What are the wider implications of this case?

While Personal Service, MoO and Control remain critically important to IR35 status, the fact that the UTT decided Ms Adams belonged outside IR35 based on other factors - such as having more than one client - shows how important it is that businesses consider all elements of an engagement when determining IR35 status.

Additionally, given the differences between the written contract and the hypothetical contract (which can be referred to as the working practices) were scrutinised throughout, parties are advised to make sure what is agreed contractually is reflected in the day-to-day provision of the services. 

The high profile nature of Ms Adams’ victory may also prove useful in showing businesses that contractors can be compliantly engaged, as we close in on IR35 reform in the private sector. Whether this case will be enough to dissuade companies from banning contractors or, worse still, blanket-placing individuals inside IR35 in response to reform remains to be seen. However, there’s no doubt that it proves risk-averse strategies are needless.


In conclusion and to recap, Ms Adams’ win can only be a good thing for the contractor sector, particularly with IR35 changes so close. It does, however, serve as an important reminder to all parties - whether contractors, end clients or recruitment agencies - that HMRC is committed to enforcing IR35 compliance as reform approaches.

Having supported over 90,000 contractors from the threat of IR35, Qdos offers a range of award-winning services, including IR35 insurance, to protect independent professionals in the event of an IR35 investigation.

By:Benedict Smith

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