IR35 – recent cases


Who would have thought it, but the ‘Intermediaries Legislation’ commonly known as IR35is almost 20 years old, despite the passage of time things around employment status are less clear than.

This is certainly no less true in the few couple of months, where we have seen  cases pass through the First-tier tribunal - with conflicting outcomes….

Christa Ackroyd Media Ltd

The BBC engaged Christa Ackroyd through her personal service company(PSC), Christa Ackroyd Media Limited (CAM), to co-present their Look North Program on a seven-year contract.

In 2013, after a three-month period off air, Ackroyd was sacked.

At the time, it was reported that the sacking was because of an alleged dispute concerning her employment status and payment of tax.

Later, this was supported by documents produced to the Courts revealing the BBC terminated CAM’s contract after HMRC issued a formal demand for unpaid tax to Ackroyd’s company.

Employed or not?

Despite Ackroyd’s insistence to the contrary HMRC successfully argued before the First-Tier Tribunal (FTT) that she was hypothetically engaged under a contract of service (employed contact) rather one for services (a self-employed contract)

The FTT’s ruling stated that she was “economically dependent on the hypothetical contract with the BBC”, which took up most if not all her working time and a “…hypothetical contract of that length………and terminable only for a material breach points towards a contract of employment.”


The First-Tier Tribunal (FTT) ruled the TV personality’s contract was caught by IR35 and landed her company with an eye watering £420,000 bill.

Mark Daniels – MDMC Limited

Bizarrely a few weeks later in March (2018) another IR35 case came before the FTT adding further layers of complexity and uncertainty.

Mark Daniels provided his services to Structured Tone Limited (SLT) though a PSC engaged on contract by Solutions, a recruitment agency.

HMRC determination

HMRC determined in 2016 that the contract to provide services on large construction projects should have been caught by IR35, and the service company should have paid PAYE and NIC.

Daniels successfully appealed, with the FTT finding the engagement was for services and Daniels should not be treated as an employee.

Lack of rights

A key factor influencing the FTT is the lack of a notice period, holiday pay or any employment benefits under the hypothetical contract. Which would have to be present if Daniels had been engaged directly as an employee.

Interestingly, the FTT dismissed “control” as a factor by concluding that in a large project there is a clear structure to the work which had to be done and that an individual working within that structure was not being controlled by the end user.(just has to fit in)

Ian Wells – Jensal Software Limited

Wells worked on a project concerned with DWP’s universal credit rollout. It involved him attending a DWP office and travelling to different sites. He had the use of a secure DWP laptop and the tribunal heard evidence of meetings between Wells and DWP managers on the project.

HMRC concluded there been a direct contract between Wells and the DWP during the period of engagement, a contract of service, not a contract for services. Wells was asked to pay £14,658 in income tax and £12,011 in respect of Class 1 NICs.

At the FTT stage the judge examined in detail at three conditions determining employment status.

  1. Mutuality of obligation (MOO),
  2. The degree of control
  3. Was sufficient mutuality of work-placed obligation and degree of control.

Only a weak MOO

On the question of MOO, the judge stated: ‘The essence of the relationship was that there was no continuing obligation on the part of the DWP to provide work; if it chose to abandon the project there was no contractual basis upon which Mr Wells could demand further work….” The relationship did not go far enough to be classed as one of employment.

Lack of control

When he turned to degree of the judge said ‘The level of control exercised did not go beyond that which was usual for an independent contractor…”

He concluded that Mr Wells was not subject to the degree of control that would constitute a contract of employment.’

Off-payroll Working for the public sector

New IR35 rules concerning “Off-payroll Working” in the public sector came into effect 6 April 2017.

Their effect was to shift responsibility for deciding if IR35 applied from the intermediary-worker to the public-sector engager.

Where an engagement is deemed to fall within the new IR35 rules the person paying the PSC (that is the public-sector body or third-party-agency) is responsible for deducting tax and NICs under PAYE.

In many instances, public-sector bodies have made blanket decisions that workers providing their services through an intermediary are caught under the new rules even when they clearly are not.

New Off-payroll consultation

Things could become even more complicated if Phillip Hammond’s stated intention to widen the reach of Off-payroll working legislation to the private sector become reality.

On the 18 May 2018 HMRC and HM Treasury published a consultation document called “Off-payroll working in the private sector”

 Where does this leave us now?

The recently flurry of FTT cases, combined with last year’s legislative changes only serve to underpin how difficult it isto navigate the intermediaries’ taxation legislation.


To end……all I can say is…….don’t hold your breath.