Former BBC Look North presenter Christa Ackroyd recently lost an appeal against a £420,000 tax bill in a case that has once again highlighted IR35 rules and employment status.
Ms Ackroyd was one of a number of people employed by the BBC through personal service companies. Her case is interesting not just because she is well known to Yorkshire television viewers, but also because it was the first such case to be considered by the Upper Tribunal (UT).
In the event, the UT found that the former news anchor was an employee of the BBC, rather than a freelance contractor, such that Ms Ackroyd now faces a bill for unpaid income tax and National Insurance contributions.
Christa Ackroyd presented Look North between 2001 and 2013. HMRC argued that as an employee of her personal service company, Christa Ackroyd Media Ltd (CAM), the company was liable for income tax and NI payments. In response, Ms Ackroyd claimed that she was a self-employed contractor and that her personal service company was not liable.
During a hearing at the First-tier Tribunal (FTT) last year, Ms Ackroyd accepted that the BBC had the right to specify what services CAM should provide and that her contract restricted her from providing services to other organisations without the BBC’s consent. She was paid by the BBC through CAM on a monthly basis. Speaking after that initial case, HMRC welcomed the judgment and said: “Employment status is never a matter of choice; it is always dictated by the facts and when the wrong tax is being paid we put things right.”
Judges in the Upper Tribunal heard Ms Ackroyd’s appeal in October and upheld the FTT decision.
This is an important development in relation to IR35, particularly with greater emphasis on the rules in the run up to changes coming into force in April next year (read more about that here). The FTT determined that if her services had been provided directly to the BBC rather than through a PSC, Ms Ackroyd would have had a contract of employment and in which case more tax would have been collected. Crucial to this ruling is the fact that the UT determined that the BBC had control over her, not necessarily in the sense of day-to-day control but in terms of her overall duties and how they were performed. The UT clarified that the important thing here was the fact that the BBC had the ability to control her, even if they were not exercising that ability.