In the first of a number of similar cases, the tax tribunal has dealt a blow to television presenters working for the BBC through personal service companies.
Christa Ackroyd, a television journalist and the former presenter of BBC1’s Look North programme appealed to the first tier tribunal after her company Christa Ackroyd Media Ltd (CAM Ltd) was deemed by HMRC to be liable to income tax and national insurance because of rules designed to prohibit workers avoiding PAYE deductions by being paid to their own Limited Company.
Ms Ackroyd was contracted to work at the BBC through her personal service company CAM Ltd between 2001 and 2013 under two separate, consecutive contracts.
The principal issue in the appeal was whether the off payroll working legislation, commonly known as IR35, applied to the relationship between Christa Ackroyd, her company CAM Ltd and the BBC.
HMRC’s contention was that Ms Ackroyd’s status was one of an employee and that CAM Ltd should account for tax and national insurance accordingly. The appellant argued that her status was similar to that of a self-employed contractor and therefore no such liability applied.
HMRC has claimed £419,00 is due whereas Ms Ackroyd claimed the amount due should be no more than £207,000.
The tribunal looked in detail at the contractual arrangements, payment of fees and working practices and considered what level of control Ms Ackroyd had in fulfilling the contract.
The tribunal noted that the length of Ms Ackroyd’s 7 year contract covering 225 days per year was an indicator of ‘a highly stable, regular and continuous arrangement’ which pointed towards an employment contract.
The tribunal also found that ‘the vast majority’ of Ms Ackroyd’s income came from the BBC - totalling 98 per cent of her income in 2009 and 96.5 per cent in 2010.
Considering all the factors, the tribunal concluded that Ms Ackroyd was an employee under the ‘hypothetical contract’ on the basis that if the services provided by Ms Ackroyd were provided under a contract directly between the BBC and Ms Ackroyd, then Ms Ackroyd would be regarded for income tax purposes as an employee of the BBC.
‘This has been a long running issue for television presenters working through personal service companies for the BBC, and for the BBC itself.
‘In this instance, it was particularly hard for the tribunal to side with the appellant given her co-presenter on BBC Look North was an employee rather than a contractor.
‘We know that HMRC has taken a close interest in BBC presenters working through personal services companies and opened 100 investigations into BBC stars. Although this is not a lead case, this decision will nevertheless be seen as a setback for other appellants taking similar cases to the tribunal.
‘Clearly these types of arrangements pose further reputational risk to the BBC and a huge financial risk to contractors.’