Eamonn Holmes loses IR35 appeal, thwarted by in-business and control

Eamonn Holmes has lost his IR35 appeal, in an estimated £250,000 tax case which non-broadcast sector PSCs might initially struggle to tune in to.

Rules from communications regulator Ofcom, on top of health and safety guidelines by Mr Holmes’ client ITV, were a “relevant factor,” states the judgment in HMRC’s favour.

The final decision about the make-up of This Morning, which the 63-year-old anchored, was ITV’s, as it had “absolute discretion” over the show’s editorial content.

'To be available'

ITV also decided what guests would be interviewed, on what topics, and Mr Holmes “was to be available” to present in the studio, attend film shoots, production meetings and rehearsals.

In trying to tease out learnings from the case, it is “hard to draw useful comparisons” in working practices relating to IR35 “between a TV host, and a developer working on project work.”

In effect pointing out that techies hired to code aren’t like media figures Mr Holmes or IR35-vindicated Gary Lineker, IR35 expert Andrew Webster made this distinction yesterday to ContractorUK.

'Jousting with the taxman'

“In contrast to the Lineker decision,” added Mr Webster, managing director of Workwell Solutions, “[the Holmes judgment] reminds us that simply being high-profile, and having the resources to fight a case, does not guarantee success when jousting with the taxman.”

And the quite emphatic dismissal of the appeal from Mr Holmes’ personal services company, Red White and Green Ltd, by the Upper Tribunal (UT) does read like it was a ‘joust.’

Three grounds of appeal to HMRC assessing him inside IR35 from 2011/12 to 2014/15 were lodged, on top of eight alleged “mis-directions” by the First Tier Tribunal.

Yet in the joust, heard in London on January 18th and 19th 2023, none of the 11 lances against the ‘inside IR35’ determination properly hit the target.

'HMRC won out with its Control argument'

The determinant factor against him that Mr Holmes’ legal team tried to counter was Control.

“Control was the main point of contention here, and HMRC won out with its argument that Mr Holmes was sufficiently controlled by ITV,” says Dolan Accountancy’s Zeeshan Anwar.

IR35 contract review firm Qdos confirmed following the judgment’s publication on Wednesday: “This case hinged on control.

“ITV was seen to control the working relationship, in the way that an employer controls employees. This is often a sticking point for freelance presenters.”

'Two similarities in play'

But because it’s often a ‘sticking point’ for IT contractors too, Control, followed by In Business On Own Account, are the lessons of the Holmes case for non-broadcast PSCs.

“While TV presenters are considered as different compared to what we consider as regular PSCs, [these] are [the two] similarities in play,” IR35 specialist Patrick Joyce assessed yesterday for ContractorUK.

“For those outside IR35, the [biggest] element that can be compared to in the Holmes case is Control.

“Take an IT contractor on a new contract. The Control factor is highly important, and needs to be addressed and understood from the off.

“The main reason that this can be difficult for IT contractors is due to non-understanding of influencing parties within the working frame.”

'Holmes frequently departed from what ITV wanted him to do'

A specialist in Status Determination Statements for ProjectScopes, Joyce will pinpoint further examples of how tech PSCs can find themselves on the wrong side of the Control equation, next week exclusively on ContractorUK.

But in his failed appeal, the control exerted over him in practice, day-to-day, was paid less significance than Mr Holmes would have liked.

Despite no challenge to the First-Tier Tribunal’s finding that the presenter had “considerable autonomy,” and even though the UT observed “he frequently departed from what ITV wanted him to do,” it is the “right of control” which was prioritised.

'Control, on the ground, less relevant'

“We do not accept that submission [that what is relevant is the practical way in which control is exercised ‘on the ground’],” UT Judge Jonathan Cannan told Mr Holmes.

Setting the correct expectations with the client from the start is therefore vital as a PSC, in broadcast circles or not, advises Mr Anwar, Dolan Accountancy’s head of compliance.

“Other TV presenters [might not] have the same problem, because this IR35 case, much like the ones before it, turned on the facts of the working relationship,” Anwar told ContractorUK. “This time between a presenter and a broadcaster.”

'Control over how, where and when also relevant'

Further significantly for PSCs operating outside IR35, the UT rejected the argument that the most important factor in assessing sufficiency of control is control over ‘what’ is to be done.

Rather, the tribunal concluded that control over how, where, and when services are to be performed was “relevant” too.

Also submitted by Mr Holmes’ legal team, equally unsuccessfully, the FTT was said to have wrongly ascribed no weight to Mr Holmes’ being “in business on his own account.”

Indeed, ITV was far from the only media outlet in receipt of Mr Holmes’ services during the contested period, as he also presented Sky News’ breakfast programme Sunrise, the BBC’s Songs of Praise, “numerous series” on Channel 5, and a game show series for US channel Fox TV.

'Failed to consider the whole picture'

But Judge Cannan said the FTT did take account of the presenter’s other activities -- it’s just that it found three factors which suggested that Mr Holmes’ ITV contract was “not part of [his] business on his own account.”

Without needing to reexplore the particulars of Holmes’ working practices, the UT similarly found that the FTT did not err in law by failing to distinguish editorial control from other “more important” types of control.

Judge Cannan quashed Holmes’ two other grounds of appeal too, rejecting both that the FTT “wrongly considered” the uncontested finding against him of Mutuality, with Control, equated to a contract of employment, and that it “wrongly disregard” factors like In Business On Own Account, with the effect it “failed to consider the whole picture.”

'Considerable experience and expertise'

Addressing IBOYA (which helped presenter Kaye Adams win her IR35 case), the UT judgment states: “It may seem that Mr Holmes’ work for several organisations points to him being in business on his own account i.e. self-employed in all of his work.

“However, the case law clearly establishes that an individual may be considered to be engaged under several contracts of employment, each contract accounting for a different period of his or her working week, and be self-employed for other engagements.”

Also bound to disappoint niche contractors claiming to be outside IR35, Mr Holmes “bringing his own…interpretation to the programme,” by “using his own…style” due to his “considerable experience and expertise” somehow failed to positively affect Control.

'Nobody more freelance than me'

Judge Cannan was even unmoved by the related finding -- one of the many from the FTT recited by the UT rather than reassessed -- that Mr Holmes' “views” on content for This Morning “often prevailed.”

Workwell’s Mr Webster reflected to ContractorUK: “This latest development in Holmes’ battle with HMRC wasn’t a re-examination of his IR35 status as such, so the decision [against him by the UT] adds little to the overall IR35 debate. The original judgment treated the control environment as critical to Mr Holmes’ status [and this ruling stands by that judgment.]”

Speaking back in 2018 on being selected by HMRC for investigation, Mr Holmes said: “I’ve been freelance 28 years and that’s been okay. Now they’ve said it’s not okay. [But] there is nobody more freelance than me.”

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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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