Ms Fospero successfully appealed a tax bill of £80,000 concerning engagements between her limited company, Canal Street Productions Ltd, and ITV between 2012 and 2014.
Tribunal Judge Ashley Greenbank concluded: “In the period in question, Ms Fospero was engaged, through Canal Street, in a separate business, she worked under a series of short-term engagements for ITV, she had no guarantee of further work outside those engagements and ITV had no obligation to provide any work. All of these factors point towards Ms Fospero being regarded as self-employed.”
Freelancer group, IPSE, warned that this shows the IR35 legislation is now so coplex that even HMRC can't understand it.
Andy Chamberlain, IPSE’s Deputy Director of Policy, said: “This is the second IR35 tribunal judgement that has come to light this week that HMRC has lost. That drives home the reality that IR35 legislation is so complex that even the UK’s tax authority cannot understand it. And if HMRC cannot grasp its own legislation, how can it expect businesses across the UK to when it changes IR35 in the private sector next April?
“The two cases this week – concerning an IT contractor and TV presenter Helen Fospero – both hinged on the absence of ‘mutuality of obligation’ in their engagements. This is critical because HMRC refuses to accept that there can ever be a contract where ‘mutuality’ is absent.
“The fact that HMRC has been judged wrong on this – and that it clearly cannot understand its own legislation – fatally undermines its CEST (Check Employment Status for Tax) tool, which freelancers are supposed to be able to use to determine their IR35 status.
“It also calls into the question the veracity of HMRC’s advice to public sector organisations about the status of their engagements – and raises concerns about its credibility and authority to oversee compliance in the private sector from next April. How will businesses be able to trust HMRC’s judgement when it continually loses IR35 tribunals?”
IR35 tax specialist, Qdos, also supported the view that HMRC was having difficulty understanding its own legislation.
Qdos CEO, Seb Maley, said: “This is the second time a contractor has defeated the taxman in the space of a week, which begs the question: does HMRC itself understand the legislation it created, enforces and will needlessly reform in exactly six months?
“This is another example of HMRC wrongly pursuing a contractor, placing them under enormous financial and emotional stress. Given the tax office’s aggressive nature towards independent workers, contractors need to be confident of their IR35 compliance.
“In exactly six months IR35 reform will be enforced. While HMRC losing an IR35 Tribunal at this time is ironic, the fact that the tax office is willing to go the distance in cases that are genuinely outside IR35 should encourage clients and agencies - that will soon become liable for IR35 - to ensure their own compliance well before April 2020.”
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