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Off-payroll working rules (commonly known as ‘IR35’) may apply if an individual personally provides services to a client through a third-party intermediary. The IR35 provisions ignore the intermediary to impose a hypothetical contract between the worker and the client to assess whether the terms of that assumed contract would point towards employment or self-employment. If the worker would be regarded as an employee under that hypothetical contract, additional tax and national insurance liabilities will apply. This is illustrated by the recent case of Red, White and Green Limited v HMRC in which the Upper Tribunal upheld a First-tier Tribunal decision that Eamonn Holmes would have been in an employment relationship under the IR35 hypothetical contract when he worked as a presenter on This Morning for ITV through his personal services company.

ITV engaged Mr Holmes under a series of annual contracts through his company (Red, White, and Green Limited) to present This Morning on most Fridays and during school holidays. He was paid a fee and did not receive any employee benefits such as sick pay, holiday pay or pension. In addition to his work for ITV, Mr Holmes presented for other TV and radio companies and wrote columns for two publications.

The First-tier Tribunal found that mutuality of obligation, the overall framework of control, and other provisions of the hypothetical contract were consistent with an employment relationship. Mr Holmes appealed, arguing that the Tribunal had misapplied the control test and other elements of the employment status tests.

The Upper Tribunal has now upheld this ruling, agreeing that the extent of the control exercised by ITV over Mr Holmes was sufficient to create an employment-like relationship. It distinguished between the autonomy Mr Holmes had over his preparations and conduct on the show, and the framework of control exercised by ITV. Mr Holmes did not often attend production meetings or rehearsals, and generally did his own research. However, ITV chose the guests and the topics to be covered and had absolute discretion and editorial control over the programme.  Mr Holmes was required to undertake promotional work and to comply with ITV’s health and safety guidelines and all Ofcom regulations. ITV could also restrict his other commercial activities. The Tribunal stressed that the absence of employment-type benefits such as sick pay, holiday pay and pension carried little weight.

This decision is the latest in a line of cases brought by HMRC against TV and radio presenters but is of potential interest to contractors in other industries. It highlights that the courts may see control by the end-user client as a determinative factor in the hypothetical contract, even where other circumstances point to self-employment. This may affect contractors who work in regulated industries such as financial services, where employers must exercise detailed oversight of their staff. It is also clear that IR35 may apply even where, as here, the worker’s other engagements are carried out on a genuinely self-employed basis. It is not yet clear whether Mr Holmes will appeal this decision further.

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