David Davis MP attacks ‘disgraceful’ HMRC for IR35-vindicating Kaye Adams nine years too late

Former minister David Davis has used Kaye Adams’s IR35 victory party to attack HMRC, branding it “disgraceful.”

The veteran Tory MP hit out last night, minutes after HMRC told ContractorUK it won’t chase the BBC presenter anymore over IR35.

Asked to verify what one ex-inspector posted online - that it isn’t appealing her outside IR35 FTT ruling, a spokesperson for HMRC said:

“Given this litigation has been ongoing for a number of years and the FTT does not set binding legal precedents, we don’t think it would be proportionate to appeal in this case.”

'Disgraceful'

HMRC conceding after four court trips over nine years that via Atholl House Productions, Adams faces no IR35 bill was welcomed online, with some even celebrating on the presenter's behalf.

But HMRC’s choice of words in accepting defeat over Adams’ 2012/13-2016/17 contracts with BBC Radio Scotland, wasn’t welcomed.

“This is a disgraceful press statement,” blasted Mr Davis on X, formerly Twitter.

“Firstly, it is not for HMRC to decide whether something is legally binding or not. That is a decision for the courts.

“It is time HMRC understood they are not judge and jury on these cases.

“Secondly, for HMRC to have even thought they could have won their case against Kaye Adams after already losing four times - is a further disgrace, effectively constituting state-sponsored libel.”

Mr Davis continued: “Kaye won against them every time, which means they are in the wrong. They should have accepted that fact, rather than continue their desperate attempts to undermine the reputation of an innocent taxpayer.”

HMRC 'sticking' to its statement despite Davis's criticisms

Asked by ContractorUK to reply to the MP’s comments, HMRC said it had nothing further to add, other than it would be “sticking” to its statement.

From her profile page last night, Kaye Adams used her X account to ‘repost’ all of the comments by Mr Davis, a vocal critic of IR35.

As to whether HMRC conceding to Adams means other presenters can breathe a sigh of relief, the ex-inspector, Tom Wallace, says probably not.

“[Despite this] major development… I am sceptical as to whether this will stop HMRC arguing similar points in their disputes with a number of TV and radio presenters that they are currently pursuing.”

'Ordeal'

Now WTT Group’s head of tax investigations, Wallace acknowledged that after her “nine-year dispute…you have to feel for Ms Adams”.

Sounding aware of what Wallace went on to call the 61-year-old’s “ordeal”, HMRC said yesterday it tries to avoid court wrangles over IR35 if it can.

The HMRC spokesperson told ContractorUK: “We always seek to resolve disputes out of court first, and only take action to litigate where this isn’t possible.” 

'Importance of courts and tribunals'

Yesterday HMRC published “Off-payroll working factsheet,” with the only new information appearing to be entitled “Importance of courts and tribunals.”

The HMRC spokesperson declined to answer whether it was “coincidence” that new details on “going through independent tribunal[s]” in IR35 cases was released on the very day it publicly conceded to Adams. 

But the Revenue official did acknowledge the factsheet, which states:

“[Independent tribunal]… is important for resolving disputes in particular cases and because it can help remove uncertainty on points of law for future cases, ensuring that the rules are clear for all taxpayers.”

'Most employment status decisions are straightforward'

There is more than one instance in the new HMRC document where the IR35 rules are indicated to usually be unambiguous.

“In the vast majority of cases, there is no dispute about the amount of tax due,” the Revenue factsheet claims.

“Most of the decisions on employment status are straightforward and do not involve litigation.”

'Minister's review or PAC inquiry needed on IR35'

A former Foreign Office minister who recently served as Brexit Secretary, Mr Davis offered his own take on cases concerning off-payroll working and IR35.

In response to the two-paragraph statement which HMRC issued to confirm it will not appeal Adams’ November 2023 win at the FTT, Mr Davis said last night:   

“It is long past time that a minister, or possibly the Public Accounts Committee, properly reviewed not just the law but the behaviour of HMRC in these cases.

"Along with the treatment of the loan charge victims, it is grimly reminiscent of the behaviour of the Post Office prosecutors.”

'Grounds of proportionality -- after nine years'

Also speaking last night, Wallace said his issue with HMRC’s statement in effect vindicating Adams was its use of the word ‘proportionate’.

“[The statement] seems to ignore that HMRC originally lost the FTT appeal in 2019,” WTT Group’s head of tax investigations began in a statement to ContractorUK.

“If HMRC had dropped the case at that point they may just about be able to claim that the action they had taken was proportionate. 

“Instead they appealed, and now nine years later they decide to not proceed with the appeal, claiming it would not be proportionate to proceed. 

“I am sure that comment will be of little comfort to Ms Adams who has endured years of stress and suffered significant legal costs defending her position.”

'HMRC Off-Payroll Working Factsheet falls short'

The former tax inspector wasn’t much more complimentary about HMRC’s new factsheet – “more than a little coincidental.”

Wallace continued: “The factsheet says very little… [as] it falls far short of given clear guidance as to when HMRC will litigate IR35 enquiries, what threshold tests they will engage, or when they will seek to overturn decisions of the First Tier Tribunal [FTT] that do not go their way.”