IR35 | ITV star Lorraine Kelly beats HMRC in £1.2m IR35 case

    ITV star Lorraine Kelly beats HMRC in £1.2m IR35 case

    ITV presenter Lorraine Kelly has won a £1.2million IR35 tax tribunal against HMRC after a judge ruled that she was not employed by the TV channel.

    Kelly, who presents the show Lorraine on weekday mornings, was slapped with a seven-figure bill from the tax office in 2016 after HMRC claimed the broadcaster was an employee of ITV.

    The Scottish star had been working for ITV through her company to present Lorraine as well as her former show Daybreak.

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    Appealing against the tax authority – Kelly claimed she was freelance - the ruling went in Kelly’s favour with the judge saying that the relationship that Kelly had with ITV was “not that of employer and employee”.

    She did not receive holiday or sick pay and was allowed to carry out other work.

    A spokesperson for HMRC said the body was “disappointed” with the ruling.

    IR35 crackdown continues?

    It seems that Kelly isn’t the only the high-profile presenter to have hit headlines over IR35.

    Last year, Eamonn Holmes found himself at the centre of a similar legal wrangle after HMRC honchos claimed he owed ‘millions’.

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    They challenged the manner in which he provided his labour services to ITV. Like Kelly, Holmes works through a limited company. His case is due to be heard soon.

    With Holmes speaking out against the pursual of his tax arrangements, other tax bodies followed suit noting that systemic pursual of BBC contractors had caused undue pressure to individuals.

    In early 2018, it was reported that one BBC worker attempted to kill herself after HMRC took her to court over what they believed was unpaid tax.

    What does the Kelly case mean for IR35?

    Whilst the legislation is designed to clamp down on disingenuous labour service provision or contracting, in Kelly’s case the judge ruled that she was a genuine contractor.

    In the ruling statement, it was explained that Kelly was not providing her services as Lorraine Kelly the employee but Lorraine Kelly the brand.

    Judge Dean said: "We did not accept that Ms Kelly simply appeared as herself - we were satisfied that Ms Kelly presents a persona of herself, she presents herself as a brand and that is the brand ITV sought when engaging her.

    "All parts of the show are a performance, the act being to perform the role of a friendly, chatty and fun personality.

    "Quite simply put, the programmes are entertaining, Ms Kelly is entertaining, and the 'DNA' referred to is the personality, performance, the 'Lorraine Kelly' brand that is brought to the programmes."

    However, there have been numerous reports of employers being too scared to rule that some individuals are genuine contractors.

    Instead, they have made blanket decisions - putting all contractors within IR35 – as employers and recruiters panic about potential liability.

    The Kelly case has also raised further criticism about the ability of HMRC’s self-assessment tool – which contractors can use to determine if they are inside IR35’s jurisdiction – to accurately assess tax liability.

    Some claim the self-assessment tool, which contractors, recruiters and engaging end-users is ‘inaccurate.’

    ContractorCalculator has called for the tool to be withdrawn claiming that HMRC’s tool contradicted the decision of the judge in this instance.

    A comment from the firm added: “It is further proof that HMRC’s CEST tool is inaccurate and, as a result, thousands of honest taxpaying freelancers have been cheated out of hundreds of thousands of pounds in the process since the Off-Payroll tax reforms came into effect in the public sector in April 2017.”

    Seb Maley, CEO, Qdos said the case highlighted the role of recruitment agencies: "Not only does this example highlight the sheer sums of money that can be involved in IR35 cases, but it also emphasises just how important it is that recruitment agencies contribute to accurate IR35 decisions. 

    "After all, recruiters operating as the fee payer in the supply chain carry the IR35 liability in the public sector. From April 2020, this will also be the case in the private sector. 
    "With IR35 reform just over a year away, Ms Kelly's case should serve as a reminder to agencies that it's in their best interests to equip themselves with the skills and expertise to help end-clients make well-informed status decisions."

    Where is IR35 now?

    A consultation is open until May 2019 on how IR35 will be implemented in the private sector.

    Lorraine Kelly has previously hosted GMTV and Daybreak and worked for BBC Scotland.

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