Last week the Queen of Daytime TV hit the headlines herself after successfully taking on HMRC.

 Lorraine Kelly has won a row over a £1.2m tax bill, after a judge ruled she was not employed by ITV, but performs as her “chatty” TV persona. 

Up for debate was her status of employment, was she, as HMRC alleged, employed by ITV or a freelance entertainer as she so claimed and why did it matter?

IR35

It all has to do with HMRC’s IR35 tax legislation, so designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.

Notable points

To support their case, HMRC presented evidence that ITV retained control over Lorraine with regard to OFCOM regulations and via the programmes editor. They argued Lorraine was subject to the same constraints of formal employment, however it was found that there was in fact minimal supervision of Lorraine and that OFCOMs role as regulator was irrelevant to control. 

Additionally Lorraine was not entitled to sick pay, employer pension entitlements, holiday pay or training and the absence of these benefits supported the defence that she was not treated as an employee.

Ruling

Taking everything above into consideration as as well as the matters of Mutuality of obligation and Right to provide a substitute, and after making a qualitative assessment of the evidence, the judge ruled that the relationship between ITV and Kelly was a contract for services, and therefore IR35 did not apply.

The takeaway?  

HMRC are not always right. They come from a very prescriptive & entrenched position and by using us (as experts) we can bring our wealth of knowledge and experience to the fight. Enabling you to push back at HMRC in a way that the average tax payer wouldn’t.  So just because HMRC say ‘its this’, don’t just roll over and accept it…do as Lorraine Kelly did and ask the expert for their opinion.