BBC actor Robert Glenister loses IR35-NICs battle with HMRC
Over-reliance on a weak set of IR35-related arguments has defeated the tax appeal of BBC actor Robert Glenister, leaving the star of Hustle almost £150k out of pocket.
And those judges, Mr Justice Henry Carr and judge Jonathan Richards, seemed to especially enjoy that throwing out of the TV conman’s claims -- broadly, that IR35 should not apply to special NIC rules only for actors.
'Relied on explanatory notes'
For example, the judges said that for one of its grounds of appeal, the PSC “relied on the explanatory note that accompanied the Intermediaries legislation” of 2000.
But released on Friday, the Upper Tribunal judgement points out that IR35’s “explanatory note is nothing more than a generalised precis of the regulations.”
Similarly, Glenister and his legal team from Devereux Chambers placed “reliance” on the explanatory notes to the Welfare Reform and Pensions Act, in arguing against the NICs bill.
“[These notes are] not purporting to deal with points of detail such as how the Intermediaries Regulations would apply to the small subset of taxpayers represented by entertainers,” the judges said. “They shed no light on how the Intermediaries Regulations apply in such a case.”
Further outlining the appeal’s “shortcomings” – albeit those arguments which the judges said amounted to Glenister’s “best case”, they said that case law cited to help him was irrelevant.
Or in their words: “References to decided cases similarly involved placing undue reliance on isolated passages of decisions that were not concerned with the issue arising in this appeal.”
Then, relating to IR35 provisions covering NICs, one aspect which Glenister’s team highlighted “cannot bear the weight that the company seeks to put on it” and similarly, a “potential anomaly” in regulations was insufficient to be meaningful, the judges found.
'IR35 is unfair'
One of the attempts to quash the NICs bill wasn't even rooted in law. “The company’s arguments in this regard [about ‘vulnerable’ taxpayers] relied on assertions which had no foundation in the legislative provisions,” the UT judgement states, adding:
“Therefore, the company’s submission is a generalised assertion that the IR35 regime is unfair.”
In a summing up of why the appeal failed, Mr Justice Carr and judge Richards said: “The logic of the Company’s position is that whole categories of taxpayers…should be exempted from that principle.
“In effect, it is asserted that entertainers, who may have achieved considerable commercial success…should enjoy the special privilege of being able to avoid NIC by contracting through personal service companies rather than directly.
“The Company has not shown us any provision explaining why entertainers…should enjoy any such special privilege; nor has it provided any reasons why they should.”
Last night, a chartered tax adviser gave his own, more critical summation. “This was a hopeless case…[involving] terms [negotiated into] contracts that were meant to put actors like Mr Glenister outside [IR35] but didn’t.”
The adviser also told ContractorUK: “The attempt was to argue that IR35 didn’t apply [because of special NIC] rules, with the consequence that actors with companies would not have to pay Class 1 NICs, even in circumstances where if there was no company they undoubtedly would do. Not surprisingly the tribunal didn’t buy it.”
A Revenue spokesman said: “HMRC welcomes the judgment that Big Bad Wolff Limited was within the intermediary rules.
“Employment status is never a matter of choice; it is always dictated by the facts and when the wrong tax is being paid, we put things right."
'Live to fight another day'
However, the case might not be over, according to Shyam Pattani, a director at employment law specialists Chartergates.
"HMRC are yet to review all of the contracts entered into by the company between April 2004 and 2011 to establish whether the payments made under each contract will meet the definition of salary as defined in the Categorisation Regulations," he said. "So Big Bad Wolff Ltd may well live to fight another day."
Editor's Note: Related --