Eamonn Holmes, This Morning presenter has lost his IR35 case to HM Revenue & Customs (HMRC) which has been deemed “a rare win” as the tax office has lost some big cases in the past six months.
Mr Holmes argued his case that he was a paid freelancer through his limited company Red, White and Green Limited, by ITV during the 2011/12 and 2014/15.
However, Judge Harriet Morgan ruled that Mr Holmes was employed by ITV and is, therefore, due to pay more tax. At the time of press, the amount Mr Holmes owes the tax office is not yet decided, still, claims have been made it could be nearly £250,000.
Mr Holmes said:
I’ve been freelance for 28 years and that’s been okay. Now they’ve said it’s not okay.
Now they’ve said it’s not okay. They have reinvented the rules in the past couple of years.
There is nobody more freelance than me, but they are trying to prove our jobs are regular and guaranteed. They could go at any moment.
Seb Maley, CEO of Qdos, who offers insurance and tax advice for the self-employed said:
While this will go down as a rare win for HMRC, it is a result that has stemmed from the needless complexity of the IR35 legislation. This is not a typical IR35 case either. And Mr Holmes’ contract with ITV will have been quite different from the vast majority of contractor engagements. With this in mind, contractors, agencies and private sector firms that make well-informed decisions regarding status should not be deterred from engaging in outside IR35 arrangements.
It’s no secret that HMRC is pursuing high-profile cases ahead of changes to the rules in the private sector. But having already failed to win IR35 tribunals against Lorraine Kelly and Talksport’s Paul Hawksbee in the past year, the tax office still has difficulty interpreting the very rules it designed.
This case serves as a timely reminder of the finely balanced nature of some of these cases, and the liability faced if HMRC disagrees with the parties’ assessment of their relationship. Given that that liability will shift to those engaging personal service companies on 6 April, and the Government has made clear that those changes are definitely going to proceed, it’s really important that those using personal service company contractors get on with their preparations for those changes. That’s equally true whether the contractor is a celebrity or not.