IR35 - HMRC scrutinising where TV presenters stand and choice of clothes for tax purposes

HMRC’s IR35 tax crackdown on the media industry has tax men checking where TV presenters stand and what clothes they wear, according to PfP, who assist clients with tax investigations.

By doing so, HMRC is reportedly able to determine whether the presenter is a self-employed contractor or employee.

Kevin Igoe, managing director at PfP, said: “HMRC is leaving no stone unturned in its efforts to determine whether TV presenters are paying the right amount of tax.

“Some of the biggest household names are being dragged into this latest push to raise more tax.

“The questions HMRC is asking are incredibly detailed and they will be carefully analysing the answers. If HMRC deems an individual’s employment status to be incorrect then that person could be left facing significant tax liabilities.”

The BBC recently estimated that up to 800 of its TV presenters could be challenged by HMRC over their employment status, and therefore will likely face this type of scrutiny.

Many of HMRC’s investigations will be related to compliance with IR35 rules. These rules prevent contractors from reducing their tax liabilities using intermediaries such as ‘Personal Services Companies’, in circumstances where HMRC would deem them to be working as employees.

Kevin Igoe adds: “It appears many of the individuals who have used Personal Services Companies were only doing so at the request of the TV companies themselves.”

BBC personalities caught out

Some well-known BBC personalities have already been caught out by IR35, with the likes of Christa Ackroyd, Lorraine Kelly and Kay Adams all having been investigated by HMRC.

James Hender, head of private wealth at Saffery Champness, said: “Understandably HMRC is seeking to plug the tax gap and crack down on what it considers to be avoidance – using an evolving toolkit of regulations, such as IR35, to do so.

“But, fundamentally, strategies such as the use of personal service companies can, in the right circumstances, be perfectly legitimate and effective – as the Lorraine Kelly and Kay Adams cases have shown.

“To some observers it may seem obvious that the likes of Lorraine Kelly are clearly not employees, given the multiple contracts they have in place.

“High profile individuals are not, necessarily, employed by the institutions that have made them famous; and the voice in the earpiece doesn’t necessarily constitute a manager.

“One might argue then that HMRC has been picking its recent battles poorly, but teething problems are always likely to emerge where the, frankly, archaic tax system is seeking to catch up with market innovation.”

Self-employed contractors pay less in tax and National Insurance Contributions compared to employees.

According to PfP, examples of the types of checks undertaking by HMRC on TV presenters include:

• Are you told where to stand during the programme or can you choose?
• Do you have to wear certain types of clothes for the programme? Is there a wardrobe of clothes you have to choose from?
• During a programme, are there certain lines or words that you must say?
• For interviews with guests, are you told what questions to ask? Are you told how to react?
• Do you have to do research before a programme or is it provided to you?
• Is transport to the studio provided for you and if so, who pays for this?
• If you are unavailable, can you be substituted for someone else? Will you keep your role as presenter if you are unavailable for a particular programme?
• Do you receive paid sick leave and holiday leave?