In a long-running battle over tax, the Upper Tribunal has thrown out TV presenter Adrian Chiles’ IR35 case, sending it back to First Tier Tribunal

HMRC has won the latest stage of a case which centres around whether Chiles’ personal service company Basic Broadcasting Ltd was used as a vehicle to reduce tax, but faces an immediate return to First Tier Tribunal after Upper Tribunal remitted case.

In the view of HMRC, Chiles should have been treated as an employee paying income tax and national insurance contributions (NICs) instead of being paid through the business when working for the BBC and ITV from 2012 to 2017.

HMRC issued demands for income tax and NICs for the period from 6 April 2012 to 5 April 2017 on the basis that the relevant contracts fell within the IR35 intermediaries legislation.

As a result, Basic Broadcasting Ltd was liable for income tax of £1,249,433 and NICs of £460,739.

At the time Chiles was working a number of presenting roles, including for The One Show, Match of the Day 2 and The Apprentice: You’re Fired for the BBC and then subsequently moved to ITV in to present a new breakfast show, Daybreak, and work on various football shows, including Champions League coverage.

Two First Tier Tribunal (FTT) hearings found that the hypothetical contracts with the BBC and ITV were not contracts of employment, and rejected HMRC’s appeal.

The latest appeal by HMRC to the Upper Tribunal has found that Judge Cannan made legal errors and that the case should now be remitted back to the FTT for a fourth hearing.

At the Upper Tribunal, Adam Tolley KC for HMRC argued that the FTT erred in law by failing to take into account, and Basic Broadcasting Ltd failed to prove, whether relevant matters were known or reasonably available to the BBC and/or ITV.

This was described as the ‘knowledge issue’ by the tribunal.

For Chiles’ part, James Rivett KC objected to this, arguing that ‘the issue was not raised before the FTT and it would be procedurally unfair to permit it to be argued in this appeal’.

The reason for the return to the tribunal was due to the Court of Appeal decision in the Atholl House case concerning Kaye Adams’ IR35 position, which she won after years of tax cases.

In the ruling, Mr Justice Meade and Judge Thomas Scott said: ‘We have not found this to be an easy decision.

‘The toll which the prolonged appeal process has already taken on Mr Chiles is significant and was described by him in a powerful witness statement which we have considered again and with care in preparing this decision.

‘That has caused us great concern, both at the hearing and subsequently, in relation to procedural unfairness.’

In the judgment, Mr Justice Meade and Judge Thomas Scott ruled: ‘The FTT shall reconsider and remake its decision in relation to the Third RMC Stage and in relation to its disposition of the appeal, taking into account and applying the guidance given in Atholl House CA, both in relation to the correct approach to the Third RMC Stage and in relation to the knowledge issue, and taking into account the terms of this decision.’

 

On the Atholl House issue, the tribunal stated that ‘the Court of Appeal decision on this issue does in our view develop (or at the least clarify) the law, and as a decision of a superior court setting out general guidance we must follow it’.

The Third RMC Stage requires a multifactorial assessment of all the terms and circumstances relevant to the hypothetical contracts.

The tribunal said that ‘the FTT’s assessment was, unfortunately, approached through the wrong prism, asking whether the contracts were entered into as part of Mr Chiles’ business on own account outside the contracts, and the FTT is best placed to reframe the question and carry out that assessment through the correct prism’.

It did indicate that the issues of mutuality of obligation and control stages, as decided in RMC, The decision shall be so remade on the basis of the FTT’s findings in the decision in relation to the mutuality of obligation and control stages of RMC.

It shall be for the FTT to determine whether to make any further findings of fact and whether to allow further evidence to be admitted.

They also added that it would be preferable for the remitted hearing to be heard by the same panel of Judge Cannan and Mr Woodman ‘given their familiarity with the facts and issues ‘as made the original decision, if practicable.

Judge Cannan has recently been appointed a salaried judge of the Upper Tribunal, but can still sit in the FTT.

TV presenter Kaye Adams issued a statement via ContractorCalculator, saying: ‘I am appalled that HMRC has once again decided to twist the knife into a fellow freelancer.

‘It seems we are now in a situation whereby HMRC will routinely challenge judgments on the basis of ‘errors in law’, forcing the taxpayer to foot the bill.

‘Despite two rulings in my favour, HMRC took me to the Court of Appeal, apparently to ‘get clarification ‘on the law, and the upshot was that I won my case again.

‘How many times and how many of us have to go through this for HMRC and the tribunal system to get their heads around fair and consistent application of IR35 legislation?

‘My cynical self says HMRC does not want clarification. It prefers to perpetuate confusion so it can continue to wage war on freelancers.’

Upper Tribunal ruling, HMRC v Basic Broadcasting Ltd [2024] UKUT 00165 (TCC)

About Adrian Chiles