Tax  

Court ruling means freelancers could face tax bill

Court ruling means freelancers could face tax bill

A string of television presenters could face large tax bills after HM Revenue & Customs won a court battle, in a case that could have wider repercussions for people claiming to work on a freelance basis.

HMRC has won a court case against former BBC presenter Christa Ackroyd over her use of a personal service company of the kind used by professionals in sectors such as IT, teaching and journalism.

Ms Ackroyd was employed through Christa Ackroyd Media, to present Look North on BBC1 until the contract with the company was terminated in 2013.

HMRC claimed Ms Ackroyd's status was that of an employee, and that therefore CAM should pay tax and National Insurance.

But Ms Ackroyd claimed she was a self-employed contractor.

But Judge Jonathan Cannan sided with HMRC and said Ms Ackroyd should pay nearly £420,000 in tax.

In his ruling he said: "We understand that the present appeal is one of a number of other appeals involving television presenters and personal service companies. However, this is not a lead case as such.

"In our view the most significant factors in the present case include the fact that the BBC could control what work Ms Ackroyd did pursuant to the hypothetical contract. It was a seven-year contract for what was effectively a full-time job.

"Standing back and making an overall qualitative assessment of the circumstances we consider that Ms Ackroyd was an employee under the hypothetical contract.

"If the services provided by Ms Ackroyd were provided under a contract directly between the BBC and Ms Ackroyd, then Ms Ackroyd would be regarded for income tax purposes as an employee of the BBC.

"We acknowledge that this is a value judgement. It is in the nature of a value judgement that different people may come to different conclusions."

Judge Cannan added that he made no criticism of Ms Ackroyd for arranging her affairs in this way since she had taken professional advice over this matter and had been encouraged by the BBC to go ahead with this arrangement.

He added that HMRC had "never suggested" Ms Ackroyd was a tax cheat or had ever acted dishonestly in any way.

Legal documents from a similar case in 2016 revealed that in 2015 HMRC was working through a list of 469 people who had been engaged by the BBC through personal service companies to establish whether further investigations were needed.

By the autumn of 2015, HMRC had opened inquiries into 100 of these cases.

damian.fantato@ft.com