Experts at Whitley Stimpson, one of the largest independent accountancy practices in the area, are keen to highlight that the HMRC is not always right when it comes to important issues surrounding small businesses, freelancers, and the off-payroll working (IR35) tax rules.
This comes as TV presenter Lorraine Kelly has succeeded in overturning demands for a £1.2m tax bill from the HMRC.
Lorraine Kelly received the national insurance and income tax bill from the tax office in 2016, after it was claimed the Scottish broadcaster was an ITV employee. Kelly maintained she was a freelancer who worked through a limited company that she runs with her husband to present her TV shows.
The presenter appealed against tax authority and the judge last week ruled in her favour that she was in fact a “self-employed star”. For businesses worried about IR35 tax rules, it was a big win.
Kelly isn’t the only high profile media personality to enter into an IR35 dispute with the HMRC: Kaye Adams, presenter of ITV’s Loose Women, was successful in persuading a tribunal recently that her personal services contract with BBC Scotland for a morning radio show was on a self-employed basis, and not as an employee, as the HMRC claimed. Adams stood to owe some £125,000 if she had lost the hearing.
Ian Parker, director of Whitley Stimpson, Banbury, said: “Public figures such as Lorraine and Kaye have proved even HMRC can get it wrong. Given the IR35 changes in 2020, businesses and individuals engaging in temporary resource need to be more aware than ever before about their working status and it’s tax implications.”
IR35 originally came into effect in April 2000 and was designed to stop contractors working as disguised permanent employees. Reforms to IR35 in the public sector were introduced in 2017, aimed at preventing working practices that HMRC regarded as ‘disguised employment.’ These rules are expected to apply in just over a year’s time to the private sector.
Ian adds: “Lorraine Kelly isn’t the most obvious hero for small businesses providing contracting services, but her victory in this landmark tax case deserves to be celebrated.”
If you or your business are at all worried by IR35, or have any questions, please contact Ian Parker, Director, on 01295 270200 or ianp@whitleystimpson.co.uk.