The warning came after BBC presenters Joanna Gosling, David Eades and Tim Wilcox were told to pay £920,000, despite a High Court judgement that the corporation had wrongly forced them to use personal service companies. (See: HMRC wins IR35 tribunal case against BBC presenters - Shout99, Sept 2019).
However, other cases involving BBC presenters have found against HMRC. This just adds to the confusion and chaos, as the sector prepares for another upheaval when the IR35 reforms are rolled out it in the private sector next year.
IPSE - 'unfit for purpose'
Andy Chamberlain, from freelancer group, IPSE, said: "That this case has taken eight years and ended up with an uncertain split decision shows how confusing and unfit for purpose IR35 is.
"We will look at the judgement in detail but the uncertainty in the decision is likely to add to the chaos around this legislation. Recently, HMRC has lost the majority of these cases. There is little evidence that they or other experienced tax specialists are confident in how it works.
"We remain at a loss how the Treasury expects medium sized businesses to accurately apply IR35 to their contractors from next year when HMRC and tax judges struggle.
"These BBC cases are high profile but not typical of IR35 issues. Most involve freelancers and contractors working on innovation and productivity projects. Burdening business with the complexity of IR35 only damages the UK economy and the overall tax take. Instead the Treasury should focus on reforming our telegram-era tax code to be fit for the broadband age."
Parasol - 'confusion
Clarke Bowles, from contractor accountants Parasol, said: "We’ve seen a number of high-profile court cases already this year that have really put IR35 in the national spotlight.
"This latest case highlights the confusion surrounding IR35 right now – the split decision decided on a casting vote emphasises how even those within the judiciary have different interpretations on the legislation. We also saw this happen in the Paul Hawksbee case earlier this year where, although HMRC lost this case, again the decision was made by casting vote.
"The BBC presenters in this case were deemed to be ‘forced’ into that working status by the hirer and the situation wasn’t helped by the provision of poorly written contracts.
"The right level of support when engaging workers like this and having contracts that are written correctly could have made all the difference.
"This case also highlights the importance of taking care when determining the IR35 status of a contract. As the courts determined that the presenters were not found to have been careless, HMRC was only able to go back four years rather than six.
"It's crucial that contractors seek advice and are able to demonstrate that they took care to determine the IR35 status of their work. This will be equally as important for end hirers when the April 2020 reforms roll out in the private sector.”
Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.
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Susie Hughes © Shout99 2019