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Markel Tax

04 Dec 2019

Canal Street Productions Ltd / Helen Fospero – IR35

There has been yet another defeat for HMRC in its seemingly relentless pursuit of media industry contractors.  The case surrounded engagements between Canal Street Productions Ltd for Helen Fospero to provide short-term ad-hoc engagements for ITV.  The years that were in question were 2012/13 and 2013/14, relating to liabilities of some £80,000 and highlighting how long this case has been ongoing!
 
Despite the growing body of cases which have quite clearly slammed HMRC’s attitude to mutuality of obligation (MOO), here we have yet another case where the Tribunal clearly and categorically stated that there was no ongoing MOO outside of the short-term engagements and ITV had no obligation to provide any work. Indeed it is hard to understand how HMRC could have considered that someone hired on a casual basis as emergency cover for various programmes, with no guarantee of ongoing work, could be considered an employee.   As MOO is one of the fundamental factors, this was fatal to HMRC’s argument that a contract of service exists which was important in this case as there were no rights of substitution, and personal service was clearly required.
 
The in-business factors were also key in this case and there are similarities to the Kaye Adams (Atholl House) case, which was won on similar grounds.  Though not fundamental aspects, every IR35 case should be considered holistically by HMRC, and as is typical in these cases, they failed to acknowledge the importance of the in-business factors in reaching their opinion. Instead, they tried to argue that Fospero was part of ITV’s business – quite a stretch considering the ad-hoc nature of the engagements!  HMRC completely failed to grasp the importance of the PSC’s other engagements outside of ITV.  The judge noted that the agreements with ITV were just part of the wider business carried on by Fospero, commenting that she undertook various types of presenting work. 
 
The two key factors that are highlighted in this case are:
  • HMRC are once again shown to be completely out of kilter in its view of MOO when compared to the correct legal position.  It doesn’t seem to matter how many times it is hauled up on this point, it still insists on pedaling the same incorrect view.  Until a case goes to UTT on the point of MOO however, there is no precedent, and that is perhaps why HMRC does not appeal these decisions where MOO is a factor.
  • There is a growing body of cases which show that whilst it is not fundamental to the decision in its own right, and generally perceived to be lower down the chain in terms of importance in considering status cases, the in-business factors can make a huge difference when viewing the position as a whole, as in this case, where the Judge placed considerable reliance on this aspect.
To find out more about how you can protect your position as a fee payer – whether you are an agency or end client engager – contact Markel tax’s IR35 team on 0345 0660 035 or email us at IR35@markel.com.
Tagged IR35 IR35
Next article in series

27 Nov 2019

The importance of tax indemnity insurance