Adrian Chiles' IR35 win 'should reassure freelancers who pitch'
TV presenter Adrian Chiles is adding his name to the list of celebrity media freelancers who have beaten HMRC on IR35 using ‘In-Business-On-Your-Own-Account.’
But despite being found outside IR35 on similar grounds to fellow ITV host Lorraine Kelly, Mr Chiles' unique set-up seems to limit the ruling’s applicability to other media freelancers.
Rebecca Seeley Harris, a tax lawyer, told FreelanceUK that as far as implications for other independent media workers can be gleaned from the 60-page ruling, “it’s a difficult case.”
“Adrian Chiles is in a unique position as a TV presenter,” Ms Seeley Harris said of the 54-year-old, who was probed by HMRC for his ITV and BBC contracts between 2012 and 2017.
The tax lawyer added: “Some of the [IBOYOA] points that swung the decision [in Mr Chiles’ favour] were that he had a management agent who he paid 15% of his revenue to.
“And he also had a Personal Assistant [whom he hired on a self-employed basis at a cost of £15,900 a year] .These were considered business costs and part of being IBOYOA.”
'Building a business'
The PA and agent are two of eight ‘in-business’ factors which First Tier Tribunal judge Jonathan Cannan listed in his ruling as applying to The One Show and Daybreak presenter.
And while non-celeb media freelancers won’t have a PA or agent (making reliance on either to keep IR35 at bay a non-starter), Mr Chiles liked to pitch -- an aspect they absolutely can draw upon.
“The FTT found after looking at his career history that Mr Chiles was ‘building a business’…[and] this clearly included where he pitched for work but was not successful,” says IR35 expert Kate Cottrell.
'Keep a record of failed pitches'
A former tax inspector, Ms Cottrell further advised in a statement to FreelanceUK: “The message from the Chiles case to freelancers?
“Well, think and act like a business and even though you might not want to grow your freelance businesses or can’t because you’re the sole worker, it is good for IR35 purposes to have demonstrable aspirations -- however they work out.
'Numerous pitches to raise his profile'
Stating that HMRC was seeking £1.7m from him, the FTT’s ruling says that Mr Chiles “spent considerable time working on numerous pitches and projects that have not come to fruition and other activity designed to raise his profile.”
“Adrian Chiles faced the prospect of a huge tax bill for years,” reflects Qdos’s Seb Maley.
“[But] it’s important to make clear that Mr Chiles’ working relationship was very different to, say, an IT contractor or freelance marketeer.”
'Does not set a precedent'
Further appearing to limit what freelancers who want to stay outside IR35 can learn from Basic Broadcasting Ltd Vs HMRC (other than the key aspect of recording pitches), law firm Chartergates points out that the case “does not set a precedent”.
Nonetheless, the FTT found that BBL’s director Mr Chiles was not an employee of the BBC or ITV, and that he was “right to organise his financial affairs through his company,” observes tax dispute firm WTT Consulting.
“Adrian Chiles is the latest celebrity to have won against HMRC in the First Tier Tribunal in respect of his [IR35] status”, posted the firm’s tax manager Jack Sloggett.
“[But his] dispute with HMRC has been running for seven years, and is likely to have been very costly for the TV presenter.”
'Large proportion of turnover'
Yet it would have been even more costly had the FTT accepted that Mr Chiles creating no intellectual property, amid getting a “large proportion of turnover” from a single client, was at odds with ‘in-business’ status.
Bauer & Cottrell, where Ms Cottrell is co-founder said: “HMRC argued [at 337 of the judgment] that the presenter had not created any IP and said that pointed away from IBOYOA, but the FTT said HMRC were wrong in this respect.
“The tribunal also commented on having one ‘good’ client [for a while and then replacing them with another sole client for a while as not]… proving he was financially dependent on BBC and ITV.”
'In-business-on-your-own-account test reemerging'
Mr Chiles’ attempt to appeal against the £1.7million IR35 demand could have also potentially failed if Loose Women presenter Kaye Adams had not gone before him at the tribunals.
ReLegal Consulting, a law firm run by Ms Seeley Harris explained its assessment: “The main point [of the Chiles case] is that the IBOYOA test seems to be having a reemergence.
“It’s interesting that the tribunal have considered the same ‘In Business On Your Own Account’ test as was used in the Atholl V HMRC -- the Kaye Adams case, which incidentally has just been appealed in the Court of Appeal. As has the Kickabout Productions case.”
'Take note of your in-business factors'
The law firm recommends that, bar having an agent or PA like Mr Chiles does, other, non-celebrity media “freelancers would be well-advised to understand the IBOYOA test.”
The firm specified: “That means making sure you take note of your in-business factors. For example; having multiple clients, having business expenditure, working on activities to maintain and grow your profile; even having professional indemnity insurance.”
22nd February 2022