Kaye Adams IR35 remittance ruling 'sums up the mess UK employment status is in'

Quibbles over whether a new IR35 ruling about BBC host Kaye Adams marks a victory for HMRC, or not, risks distracting from the big picture -- the sheer mess of employment status.

Such is the consensus of experts, as while the ruling achieves HMRC’s aim of returning her status to court -- albeit not on grounds it sought, what the judges said may transcend the case.

'Sums up the mess UK employment is in'

Chris Mattingly, a status adviser with WTT Consulting perhaps explained it best.

He told ContractorUK: “I am not sure IT contractors need to be too concerned with the Adams [ruling]…as most tech contractors operate quite differently to radio presenters.

“That said… the judge commented that ‘it would certainly be desirable if, there were one clear test or approach to determining whether a person was an employee.’

“Well, this really sums up the mess that the UK finds itself in. With ambiguous laws, and no statutory definition of self-employment, these cases will continue to come.”

'May jolt HMRC'

Chartergates, a law firm specialising is status, believes the expression of frustration from the Court of Appeal could be significant enough to prompt HMRC to refresh its resources.

“The ruling may jolt HMRC to re-visit and revise their employment status guidance to include the much-maligned Check Employment Status for Tax tool,” the firm says.

Sounding keen for at least some sort of revision with effects that go beyond the case of BBC presenter Ms Adams, is the Association of Professional Staffing Companies.

'Detrimental impact on labour market'

Pointing to the judge yearning for a clear way to make a determination (and saying that ‘important legal consequences flow from this determination’), APSCo says it is overdue.

Tania Bowers, a director at the association, spoke of the same absence of a “clear definition” of employment for tax purposes as having “a detrimental impact on the UK’s labour market.”

There’s also financial detriment at stake, both for the former host of The Kaye Adams Programme and all other taxpayers who disagree should HMRC deem them inside IR35.

'Adams' battle looks set to continue'

“The Court of Appeal has instructed for the case [of Kaye Adams and her Atholl Productions Ltd] to be reheard at the Upper Tribunal,” begins Qdos CEO Seb Maley.

“The case carries around £124,000 in tax liability. And while [her] IR35 battle looks set to continue for some time…the very fact it progressed to the Court of Appeal just goes to show how complex and ambiguous the IR35 legislation is.

“And in turn, how easy it is to misinterpret and misapply it -- a mistake that can cost hundreds of thousands, if not millions of pounds.”

'Positive for the tax office'

An IR35 contract reviewer, Mr Maley said the CoA had “not” handed a win to HMRC, even though remitting the case to the UT represents a “positive development for the tax office.”

“Dig a little deeper [into the judgment] and we find that HMRC's appeal in the case of Ms Adams has been allowed on the basis of a secondary argument, not HMRC's main line of defence,” agrees Orange Genie’s Helen Christopher.

A chartered accountant, Ms Christopher continued: “Rejecting HMRC's primary argument, the CoA reiterated the need to look at all the circumstances ‘in the round’ when assessing IR35 status, including whether or not the contractor is actually operating a business in their own right.”

'Much-needed clarity'

Chartergates sees the ruling affecting Ms Adams similarly, saying that while “the case does not” constitute a “defeat as such for HMRC, the CoA has provided “much-needed clarity”.

Notably, “that a party which is genuinely in business on their own account in a contractual arrangement should be treated as such, despite other factors such as personal service and a level of control which may point the other way and toward an employment relationship”.

APSCo’s Ms Bowers echoed that the Adams’ judgment makes clear that, “elements such as the degree of control – even if it’s found to exist – cannot be solely relied on for a determination.”

Sounding aware that the April 2021 off-payroll rules put the onus on engagers to determine status, Ms Bowers further advised: “The need to obtain information on multiple facets of a placement to determine if it falls inside or outside IR35 is crucial, in order to paint a more accurate picture”.

'Cannot be boiled down to a simple tick-box exercise'

Last night, Adrian Marlowe, managing director of Lawspeed, the recruitment law firm reiterated as much in a statement.

“The Adams case provides further confirmation that the assessment of employment status is a complex matter and will always involve a detailed analysis of all the relevant facts on a case-by-case basis,” Mr Marlowe told ContractorUK.  “It cannot be boiled down to a simple tick-box exercise.”

Known to be fond of box-ticking, HMRC still got its way (given the Adams case will return to court), but at a potential price, because mopping up IR35 cases with one factor is reinforced by the ruling to be a non-starter.

'Adams' judgment provides hope for many'

Or as Chartergates preferred on Friday in an update: “[The Adams judgment] is a significant ruling and provides hope for many, given it provides much-needed affirmation that the entire picture must be considered, rather than a narrow-minded focus on certain chosen factors on the part of HMRC.

“The process must include a wide-ranging and forensic assessment of any and all the unique facts of a case to include whether an engagement is consistent with running a business.”

Acknowledging it was ‘paraphrasing,’ the law firm further said HMRC tried to argue as much in its bid to get Adams back to court, by saying only her contract terms should be considered, not her “pattern of work” or “factors outside the specific contract”.

'Fourth attempt to get certainty'

So the taxman getting “contradicted” by the appeal court, the update adds, regardless of the court granting the outcome HMRC wanted, is therefore being seen as a big blow to HMRC.

But the real, immediate anguish is for one party only. “Commiserations must go to Kaye Adams,” says status expert Kate Cottrell of Bauer & Cottrell. “After all, she now has to face a fourth tribunal, having already gone to court three times, just to get certainty about her IR35 status.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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