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Upper Tribunal Upholds FTT Decision In Another IR35 Case
Wednesday 5th April 2023
The Upper Tribunal has recently dismissed the taxpayer’s appeal against a decision of the FTT involving the intermediaries legislation.
In Red White and Green Ltd v HMRC [2023 – UKUT 83 TCC], the appellant [RWG] was a personal service company which contracted to provide the services of Eamonn Holmes [EH], a well-known television and radio presenter, during tax years 2011/12 to 2014/15, to ITV as a presenter of ‘This Morning’.
HMRC issued determinations and notices to the appellant for those tax years on the basis that the intermediaries’ legislation was engaged on the basis that the intermediaries legislation applied.
The intermediaries legislation applies where the individual (the worker) personally performs services for another person (the client), via a third party (the intermediary). However, the provisions are only engaged where the circumstances are such that if the services are provided under a contract directly between the client and the worker (the hypothetical or assumed contract), the worker would be regarded for income tax and NIC purposes as an employee of the client.
The appellant appealed against the determinations and notices on the basis that the
intermediaries legislation was not engaged. It contended that if there had been a contract between EH and ITV, the worker would not have been regarded as an employee of the client, but as self-employed.
Following a detailed analysis, the FTT held that the intermediaries’ legislation was engaged because under the hypothetical contract EH would have been an employee of ITV.
The appellant appealed on the grounds that the FTT erred in law in determining that EH would have been an employee of ITV pursuant to the hypothetical contract. Whilst there was no challenge in the appeal to the FTT’s conclusion on mutuality, there was a challenge to the FTT’s conclusion on control, in particular, in relation to control by failing to distinguish “editorial control”, which was how a worker does the work, from other more important forms of control, and what work should be done by the worker. The appeal also referred to the FTT wrongly considering that its finding of sufficient mutuality of obligation and sufficient framework of control led to a presumption that there was a contract of employment.
The UT referred to various cases including Atholl House and the analysis of editorial control under the hypothetical contracts and whether they gave ITV only a limited right of control. Counsel for the appellant submitted that the control which did exist was consistent with a person in business on his own account. The UT however held that that may be true but it was also sufficient for there to be a contract of employment and that the FTT had taken this into account in its multi-factorial analysis. The UT concluded that the appellant had not established any error of law in the grounds of appeal.
The UT added that EAs work for several organisations could have pointed to him being in business on his own account i.e. self-employed, in all of his work. However, case law clearly established that an individual may be considered to be engaged under several contracts of employment, each contract accounting for a different period of his or her working week, and be self-employed for other engagements
If you would like further detail on the above, please contact Keith Rushen on 0207 486 2378.
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