HMRC has won its case against former BBC “Look North” presenter Christa Ackroyd at an IR35 tribunal.
Ms Aykroyd, who maintains that she worked for the BBC on an independent contracting basis through her PSC (personal service company), had appealed the HMRC’s claim to tax owing for the years 2006-2007 to 2012-2013 under original, pre-reformed IR35 rules. HMRC claimed that she owed a total of £419,151 in outstanding tax and NICs for this period.
Changes to IR35 regulations introduced in April last year were designed to crack down on the use of PSCs in the public sector, as the government believed they were being used to avoid tax.
Ms Ackroyd had argued that, under the terms of the original IR35 legislation, she was a self-employed contractor and not an employee of the BBC. Her PSC therefore owed no additional tax liabilities.
The tribunal, however, found otherwise. It ruled that the services she had provided had been delivered under a contract directly between the BBC and Ms Ackroyd, rendering her in effect an employee of the organisation for income tax purposes.
Commenting on the ruling, Dave Chaplin, CEO and founder of ContractorCalculator, an online advisory service for contracting professionals, said:
“Whilst the case looks clear cut, it appears the tribunal made a decision based on facts cherry-picked by HMRC and HMRC has effectively put her out of a job; HMRC did not even speak to her before making its judgement and reached its conclusion on inadequate information.”
He went on to say that the HMRC was facing an “impossible task ahead” with its plans to roll out public sector IR35 reforms to the private sector. The new regulations, he said, had a “devastating impact” so far. Ms Ackroyd’s case, he suggested, underlines the need to pause, properly assess and reflect before steaming ahead with private sector IR35 and at least give private enterprises sufficient time to plan for any changes.
Meanwhile, addressing the likely impact of any extension of reformed IR35 rules to the private sector, Andy Chamberlain, deputy director of Policy and External Affairs at the Association of Independent Professionals and the Self Employed (IPSE) said:
“The current drive to push all the liability onto the client from the outset is like using a sledgehammer to crack a nut. Last year’s change to the way IR35 works in the public sector has essentially stopped contracting in the sector altogether, robbing it of vital specialist skills and damaging public services. If the Government extends the reforms to the private sector, as it has signalled it wants to, it will damage not only our flexible labour market, but the UK economy as a whole.”