Why contractors shouldn’t fear the Hawksbee and Adams IR35 verdicts
IR35 case verdicts are a lot like buses. You wait years for one to arrive, only for two to come at once, writes Seb Maley, CEO of status advisory Qdos.
This was the situation encountered last week, when not one but two Court of Appeal verdicts deliberating the IR35 compliance of two high-profile presenters were announced on the very same day.
Not the usual spotlight either would choose to be under
On this occasion, the two individuals under the spotlight were Talksport radio host, Paul Hawksbee, and BBC presenter, Kaye Adams.
Hawksbee of Kickabout Productions Ltd was appealing an Upper Tribunal defeat dating back to 2019. Back then, HMRC had found the Talksport mainstay to be inside IR35 between 2012 and 2015.
Now, but this time at the Court of Appeal, the co-presenter of the ‘Hawksbee and Jacobs Show’ has again been deemed inside IR35, with the judge roundly rejecting his appeal. It leaves the radio presenter with a tax bill in the region of £140,000.
A second IR35 bill running into the hundreds of thousands
Meanwhile, in the separate case – which also found itself at the Court of Appeal – it was HMRC appealing an Upper Tribunal verdict in 2021.
This centred on the decision to deem BBC presenter, Kaye Adams of Atholl House Productions Ltd, a genuine contractor for her work presenting the ‘Kaye Adams Show’ for BBC Scotland.
But this £124,000 case still hangs in the balance, with the judge partly accepting HMRC’s appeal and instructing for the case to be reheard in due course at tribunal.
HMRC victory is not a wider cause for concern
While one HMRC victory and another in which the tax office will feel – whether rightly or wrongly – that it has the upper hand, will always concern contractors, these two high-profile verdicts aren’t your typical IR35 cases.
Whether it’s Eamonn Holmes, Gary Lineker or Lorraine Kelly, the contracts held, not to mention working practices, of many presenters – whose personality the show is often so closely dependent on – are very different from, say, an IT contractor providing their services to a telecoms firm.
With this in mind, it’s important that these cases are put into perspective.
Hawksbee’s and Adams’ engagements were not clearly outside IR35
First, and focusing on the Hawksbee case, the radio host failed all three of the key IR35 status tests.
The engagement was ultimately controlled by Talksport. Hawksbee also provided a personal service (as presenters often do) and mutuality of obligation was seen to exist. This is despite Hawksbee putting forward an argument that the Upper Tribunal misinterpreted the contracts held between the two parties, to the extent that mutuality wasn’t present in reality.
Ultimately, all aspects of Kickabout’s appeal were thrown out by Judge David Richards who, in response to the mutuality argument, pointed towards the expectation for Hawksbee to present a three-hour show on an exclusive basis for at least 22 days a year, across two years.
I reference this to highlight just one of the many contrasting aspects of Kickabout Production Ltd’s engagement with Talksport – aspects which aren’t likely to come into play for everyday contractors.
And while the Kaye Adams case is yet to run its course – and may well still see HMRC lose its long-running battle despite the rehearing – the former Loose Woman presenter’s contract with BBC Scotland only allowed for the right of substitution in ‘exceptional circumstances’, was controlled by the broadcaster and yet again, mutuality was seen to exist.
Is this case-closed for Hawksbee?
While it’s wait and see for the Adams case, what next for Paul Hawksbee, given his latest appeal has been shot down?
The last opportunity Hawksbee has at winning his IR35 battle is at the Supreme Court of all places. But this isn’t straightforward, assuming the presenter decides to appeal this latest verdict. Typically, one has to apply to the Supreme Court for permission to appeal, with an Appeals Committee – made up of three Supreme Court Justices – deciding whether or not to grant this permission.
As you can imagine, permission is given sparingly. And in the case of Hawksbee, whose contracts and working practices beared many hallmarks of an inside IR35 engagement, it remains to be seen as to whether the Supreme Court would see this latest decision as unjust. So it could well be a HMRC victory that is upheld – although I’m hesitant to rule anything out.
Finally, these were ‘freelance’ operators like you – but not like you
However, the key takeaway from both of these cases, is that Hawksbee and Adams – while both ‘freelance’ in many senses of the word – work in a very different way to the vast majority of contractors, who should in theory be able to demonstrate their outside IR35 status more easily.