Presenter loses long-running IR35 case and is left with an estimated £250,000 tax bill
Eamonn Holmes has lost his five-year-long IR35 ordeal after the host of ‘This Morning’ was defeated by HMRC at the Upper Tribunal.
The Upper Tribunal hearing was held on the 18th and 19th of January and followed a 2020 First Tier Tribunal (FTT) that deemed Eamonn Holmes should have been operating inside IR35 when presenting ITV’s This Morning show from 2011 to 2015.
Holmes’ fate was decided by the Upper Tribunal Judge, Jonathan Cannan, and Mr Justice Mellor, who spoke of the “sufficient framework of control” ITV held in the relationship, stating: “we do not consider that Mr Gordons’ [Holmes’s appointed counsel] criticisms of the FTT’s conclusion in relation to control… are well-founded.”
They added: "we are satisfied that the FTT did properly direct itself as to the question of control” and concluded, “we do not detect any error of law in the approach of the FTT to the question of control."
The tax liability in this case has never been publicly disclosed. However, reports have regularly estimated it as approximately £250,000. This figure is based on invoices sent from Holmes’s company – Red White and Green Ltd – to ITV throughout the duration of the contracts.
Holmes is just one of a number of high-profile presenters who have been targeted by HMRC in recent years. Although Lorraine Kelly, Adrian Chiles and Gary Lineker, who were all subject to lengthy IR35 cases, all successfully defeated HMRC. Lineker, incidentally, won his £4.9m IR35 case just this week.
Last year, Holmes called HMRC the “department of thievery”, accusing them of “ruthlessly” pursuing freelancers and contractors – an indication of the personal toll the protracted IR35 investigation has taken on him.
Where was the case won and lost?
In the Upper Tribunal, Holmes contested that “the FTT erred in law in relation to control by failing to distinguish” between ITV’s editorial control and control over a worker.
The fine line between editorial control – which is regulated by Ofcom – and control over how the work is performed is a contentious area for freelance TV presenters specifically, though not for the contractor population at large.
Holmes’s defence argued on the grounds that, in several elements of the presenter’s working relationship with ITV, he had “considerable autonomy” in how he worked, “bringing his own stamp and interpretation” to the role.
And while Holmes informed ITV of any other client work, he “did not seek permission from ITV in relation to his other commercial activities”. Nor did ITV “regard him as requiring their permission”. Indeed, Holmes had other engagements across a range of broadcast media at the time.
However, these grounds were all rejected at the Upper Tribunal. The tribunal judge deemed Holmes subject to control, citing previous case law which found that regulatory control, including editorial, “was a relevant factor in considering the sufficiency of control”.
Alongside this, the case notes reference that the contract between Holmes and ITV “was for personal service by Mr Holmes and there was no provision for him to provide a substitute presenter”.
Again this is a challenge, particularly for freelance presenters, if not typical contractors.
What does this mean for contractors?
This case is another indication of HMRC’s persistence in targeting well-known freelance presenters.
The factors that decided this case – largely the control that ITV was viewed to hold over Holmes – can be difficult for TV personalities to overcome. Would ITV’s viewers tune in without Holmes presenting the This Morning show?
Holmes’s IR35 ordeal – like Gary Lineker’s – also highlights that IR35 cases can last for several years. In addition to the emotional stress, the cost of defence can mount up, without IR35 insurance in place.
Finally, this case serves as another reminder that IR35 is a complex, ambiguous legislation which, if misunderstood and misapplied, can result in significant tax liabilities.