Out-Law News 1 min. read

IR35 win for Adrian Chiles ‘shows complexity’ of UK rules


Broadcaster Adrian Chiles has won his long-standing case against the UK’s HM Revenue & Customs (HMRC), following a tribunal ruling that he was not an employee for tax purposes of the BBC and ITV and was instead “in business on his own account.”

Tax expert Penny Simmons of Pinsent Masons said that the tribunal’s decision “demonstrates how complicated the rules are to apply and adds to the growing uncertainty for business as to when contractors should be taxed as employees within IR35”.

“One of the difficulties with IR35 is that there is no single definition of employment status for tax purposes, rather it is necessary to look at a number of factors together,” she said.

Simmons Penny

Penny Simmons

Legal Director

The decision adds to the complexities of determining employment status for tax purposes and will not be helpful to business trying to apply the rules and manage IR35 tax risks

“Historically, HMRC has focused on three factors: whether there was personal service between the individual contractor and the engaging business and whether the individual could provide a substitute, the level of control that the business had over the individual and whether there was mutuality of obligation between the parties. Here, the tribunal decided that although there was mutuality of obligation, no right of substitution and a level of control, it was necessary to ‘stand back and look at the circumstances as a whole’,” she said.

HMRC had argued that the IR35 rules applied to contracts that Chiles had with both the BBC and ITV to provide TV and radio presenting working between 2012 and 2017. The contracts were with Chile’s personal service company (PSC), Basic Broadcasting Ltd. HMRC considered that Chiles should have been taxed as an employee due to the nature of his work with both the BBC and ITV.

The IR35 rules require that employment taxes be paid by people who provide services to a business through a PSC or other intermediary if that person would otherwise have been regarded as an employee for tax purposes of the engaging business. From 6 April 2021, engaging businesses became liable for determining whether the IR35 rules apply, operating PAYE and paying employers' National Insurance contributions for contractors falling within the scope of the rules. Previously, where a private sector business engaged a contractor through a PSC, liability to decide whether IR35 applied and to pay any employment taxes rested with the PSC.

Simmons said: “The decision will undoubtedly be welcomed by contractors looking to engage with businesses through PSCs. However, it adds to the complexities of determining employment status for tax purposes and will not be helpful to business trying to apply the rules and manage IR35 tax risks.”

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