TaxNov 7 2019

HMRC loses another contractor tax case

Search supported by
HMRC loses another contractor tax case

TV presenter Helen Fospero has won her case against HM Revenue & Customs, escaping a tax charge of £80,000 under IR35 legislation.

This was another blow for HMRC and marked the second IR35 case it lost in October in less than a week.

In a decision published on October 25 the First Tier Tribunal allowed Ms Fospero’s appeal against a previous IR35 decision, which ruled that she had to pay income tax and national insurance contributions to the sum of £80,770.

IR35, first introduced in 2000 by then-chancellor Gordon Brown, is an anti-tax-avoidance rule that applies to all contractors and freelancers who don’t fall under HMRC’s definition of being self-employed.

It is designed to crack down on workers supplying their services to clients through an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.

The latest case centred on engagements between Ms Fospero’s limited company, Canal Street Productions Ltd, and ITV during the 2012/13 and 2013/14 tax years.

The tax years in dispute where when she was working primarily for ITV as a guest presenter or news presenter on Daybreak and Lorraine.

Although HMRC argued that Ms Fospero was effectively employed by ITV so should pay income tax and NICs, Judge Ashley Greenbank concluded that she was engaged with ITV through a separate business with no guarantee of work.

Judge Greenback said: “In the period in question, Ms Fospero was engaged, through Canal Street, in a separate business, she worked under a series of short-term engagements for ITV, she had no guarantee of further work outside those engagements and ITV had no obligation to provide any work. 

“All of these factors point towards Ms Fospero being regarded as self-employed.”

Much the same as most IR35 cases, Ms Fospero’s appeal centred on one of the key tests of the IR35 status known as mutuality of obligation (MOO) and control.

According to Contractor Calculator, which provides guidance for freelancers, mutuality of obligation is one of the essential tests of employment status examined by all tax tribunals in IR35 cases to establish whether a contractor is in fact a disguised employee and therefore subject to the provisions of IR35.

During the case it was acknowledged that ITV anticipated being able to offer a minimum amount of days' work to Ms Forespo and HMRC claimed this meant there was a level of commitment between the two parties.

However Judge Greenbank stuck by his decision that there was still no guarantee of any work and no obligation for Ms Fospero to accept this work.

Judge Greenback said: “There would be no mutuality of work-related obligation between the engagements: Ms Fospero would have no guarantee of work and would be under no obligation to perform work if it was offered. 

“She would be engaged on an assignment by assignment basis. Those assignments would be very short term, many involving only a matter of hours in the studio, albeit some requiring several hours of preparation in advance. 

“Although there would be a hope and expectation of further work under the arrangements, for the most part, when she finished work on a particular engagement, Ms Fospero would have no assurance that she would be offered further work.”

Therefore he decided to allow her appeal.

An HMRC spokesperson said: “We are considering an appeal.”

Dave Chaplin, chief executive officer and founder of Contractor Calculator, said: “This appears to be a sensible approach by the tribunal – to properly stand back and consider whether the presenter was in business on their own account.  

“Helen Fospero clearly was; she was in the business of presenting and broadcasting and was doing so on a self-employed basis. 

“This is the second IR35 case, after the Atholl case in April when Kaye Adams won her appeal, which was also decided on due to her being in business on one’s own account.”

He added: “It is surprising this case went as far as tribunal, because it does appear that Ms Fospero was a casual worker with no obligation to accept work or be offered work – which is one of the key tenets of employment. HMRC clearly took a very narrow-minded view.”

In a decision published few days after Ms Fospero's (October 29), HMRC lost its case against an IT consultant whom it deemed liable for £243,000 in tax.

From 2010 Richard Alcock, through his limited company RALC Consulting Ltd, entered into a series of contracts with former employer Accenture and the department for Work & Pensions, which was a client of Accenture and whose projects Mr Alcock had previously worked on.

HMRC argued that continuing to work for his former employer implied that Mr Alcock was carrying out continued work.

But the judge threw out this argument and allowed the appeal after he deemed Mr Alcock to be self-employed.

However, other cases have gone in HMRC’s favour.

Last week (October 28), former BBC presenter Christa Ackroyd lost her appeal against the tax authority making her liable for more than £400,000 in outstanding tax under IR35 legislation.

What do you think about the issues raised by this story? Email us on to let us know