InBasic Broadcasting Ltd v HMRC [2022] UKFTT 48 (TC) (9 February 2022), the First-tier Tribunal (FTT) allowed the taxpayer’s appeal determining that Mr Chiles’ contracts with the BBC and ITV were to be treated as conducting business on his own account.
Basic Broadcasting Limited (BBL), the personal service company of Adrian Chiles, the well-known television and radio presenter, appealed against determinations by HMRC that it owed income tax and NICs pursuant to ITEPA 2003 ss 48-61, being the IR35 provisions. The determinations were in respect of tax years 2012/13 to 2016/7, during which time BBL held several contracts requiring it to provide Mr Chiles’ services, including two with ITV (including for presenting ITV’s coverage of the 2010 and 2014 FIFA World Cups, the Euro 2012 tournament, as well as Champions League and other major football matches) and three with the BBC (including for presenting numerous, regular programmes on Radio 5 Live).
Having identified the terms of the actual contracts and ascertained the terms of the hypothetical contracts (as required by ITEPA 2003 s 49(1)(c)), the FTT concluded that there was sufficient mutuality of obligation and control in the BBC and ITV contracts to constitute Mr Chiles, prima facie, an employee of both the BBC and ITV.
In the FTT’s view the most significant factor that might displace that prima facie case was whether Mr Chiles was in business on his own account, a conclusion that could only be reached if it were held that the hypothetical contracts could properly be seen as part of his own business.
The FTT considered numerous principal factors which established that Mr Chiles was indeed in business on his own account, including that he had a significant number of other clients and had undertaken work on various other commercial projects, as well as that he had appointed an agent and a personal assistant. It ‘was clear’ to the FTT that Mr Chiles, through BBL, was building a business.
The FTT took into account the nature and extent of the framework of control it had found to exist and the nature and extent of the business which it had found Mr Chiles was to be treated as conducting on his own account. In all the circumstances, the FTT considered that Mr Chiles was to be treated as entering into the hypothetical contracts as part and parcel of that business. They were contracts for services and not contracts of employment. The FTT concluded that the condition in s 49(1)(c) was not satisfied in relation to the ITV contracts or the BBC contracts in any of the relevant tax years.
Why it matters: Despite the FTT concluding that there was sufficient control and mutuality of obligation in the hypothetical contracts to suggest that Mr Chiles was an employee of the BBC and ITV, there were sufficient other factors which allowed the FTT to conclude that those hypothetical contracts were part and parcel of Mr Chiles carrying on business on his own account albeit through his personal service company.
The FTT did not agree that Mr Chiles employing an agent was a neutral factor; instead, the FTT held that it pointed towards Mr Chiles being in business on his own account. It was not decisive but was a factor which indicated self-employment. Similarly, in relation to BBL’s expenditure on a personal assistant, the FTT did not consider that there was much significance in the fact that Mr Chiles engaged a personal assistant as a matter of choice rather than necessity. If it was a matter of necessity and Mr Chiles was not reimbursed by ITV or the BBC then that would ‘certainly’ point to self-employment. However, even where it is a matter of choice, the FTT considered it was indicative of self-employed status.
InBasic Broadcasting Ltd v HMRC [2022] UKFTT 48 (TC) (9 February 2022), the First-tier Tribunal (FTT) allowed the taxpayer’s appeal determining that Mr Chiles’ contracts with the BBC and ITV were to be treated as conducting business on his own account.
Basic Broadcasting Limited (BBL), the personal service company of Adrian Chiles, the well-known television and radio presenter, appealed against determinations by HMRC that it owed income tax and NICs pursuant to ITEPA 2003 ss 48-61, being the IR35 provisions. The determinations were in respect of tax years 2012/13 to 2016/7, during which time BBL held several contracts requiring it to provide Mr Chiles’ services, including two with ITV (including for presenting ITV’s coverage of the 2010 and 2014 FIFA World Cups, the Euro 2012 tournament, as well as Champions League and other major football matches) and three with the BBC (including for presenting numerous, regular programmes on Radio 5 Live).
Having identified the terms of the actual contracts and ascertained the terms of the hypothetical contracts (as required by ITEPA 2003 s 49(1)(c)), the FTT concluded that there was sufficient mutuality of obligation and control in the BBC and ITV contracts to constitute Mr Chiles, prima facie, an employee of both the BBC and ITV.
In the FTT’s view the most significant factor that might displace that prima facie case was whether Mr Chiles was in business on his own account, a conclusion that could only be reached if it were held that the hypothetical contracts could properly be seen as part of his own business.
The FTT considered numerous principal factors which established that Mr Chiles was indeed in business on his own account, including that he had a significant number of other clients and had undertaken work on various other commercial projects, as well as that he had appointed an agent and a personal assistant. It ‘was clear’ to the FTT that Mr Chiles, through BBL, was building a business.
The FTT took into account the nature and extent of the framework of control it had found to exist and the nature and extent of the business which it had found Mr Chiles was to be treated as conducting on his own account. In all the circumstances, the FTT considered that Mr Chiles was to be treated as entering into the hypothetical contracts as part and parcel of that business. They were contracts for services and not contracts of employment. The FTT concluded that the condition in s 49(1)(c) was not satisfied in relation to the ITV contracts or the BBC contracts in any of the relevant tax years.
Why it matters: Despite the FTT concluding that there was sufficient control and mutuality of obligation in the hypothetical contracts to suggest that Mr Chiles was an employee of the BBC and ITV, there were sufficient other factors which allowed the FTT to conclude that those hypothetical contracts were part and parcel of Mr Chiles carrying on business on his own account albeit through his personal service company.
The FTT did not agree that Mr Chiles employing an agent was a neutral factor; instead, the FTT held that it pointed towards Mr Chiles being in business on his own account. It was not decisive but was a factor which indicated self-employment. Similarly, in relation to BBL’s expenditure on a personal assistant, the FTT did not consider that there was much significance in the fact that Mr Chiles engaged a personal assistant as a matter of choice rather than necessity. If it was a matter of necessity and Mr Chiles was not reimbursed by ITV or the BBC then that would ‘certainly’ point to self-employment. However, even where it is a matter of choice, the FTT considered it was indicative of self-employed status.
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