TV personality wins IR35 appeal case

Apr 01, 2019

In a recent First Tier Tribunal (“FTT”) case, the TV personality Lorraine Kelly’s company won its appeal against a tax and NIC assessment of over £1 million by successfully arguing that Ms Kelly was not an employee of ITV. To date it is not clear if HMRC plans to appeal the FTT’s decision.  

The case comes at a time when the UK is reviewing employment status in the context of modern working practices and when there are plans to extend the IR35 off-payroll working rules in the public sector to the private sector from April 2020. 

In Albatel Ltd and the Commissioners for Her Majesty’s Revenue and Customs [2019 UKFTT 195, TC07045], HMRC were seeking to argue that there had been a direct contract between Lorraine Kelly and ITV Breakfast Ltd in connection with her work for the programmes 'Daybreak' and 'Lorraine'. This was therefore a contract of service, meaning the company would need to account for income tax and NICs as she was effectively an employee of ITV.

Albatel was able to successfully argue that the nature and range of Ms Kelly's work meant she should be treated as self-employed on the basis that she is a freelancer who decides her own hours, what items should be included in her shows and when she works. She does not receive sick pay or a pension, and there is no guarantee that her contracts will be renewed.

ITV is under no obligation to pay her if she is unable to present the show. Ms Kelly is not provided with any office space by ITV and she carries out her preparation work at home. In the hour that Ms Kelly is contracted to work she has total control over the show’s content and any additional work related to the show is her choice.

The tribunal had to decide whether the contract was a contract of services or a contract for services, considering issues such as mutuality of obligation and control. In looking at the overall picture, the tribunal reached the view that the relationship was a contract for services and not that of employer and employee.

The case also dealt with a secondary argument in respect of whether or not she was a ‘theatrical artist’ and thus was able to receive a deduction for her agent’s fees. HMRC had not accepted this description of her role, arguing that she was a current affairs journalist. The Tribunal disagreed with HMRC and accepted that Ms Kelly was not appearing as herself but was presenting a persona of herself as a brand, and it was the brand that ITV sought when engaging her.