[UK] HMRC disappointed by Lorraine Kelly tax case win

ITV presenter Lorraine Kelly has won a UK tax tribunal “disguised employment” case, to the disappointment of HMRC, Financial Times reports.

The case was over a £1.2million bill. With HMRC reportedly arguing that the broadcaster was in violation of IR35 legislation. IR35 is designed to prevent workers from avoiding tax by offering services to clients through a limited company, rather than as the client’s employees.

The first-tier tribunal ruled in favour of Albatel - Lorraine Kelly’s company - and upheld the company’s appeal against a tax bill of around £900,000. And for National Insurance contributions totalling a further £300,000, from Ms Kelly’s work with ITV Breakfast from September 2012 until July 2017.

Ms Kelly was ruled a “self-employed star” by Judge Jennifer Dean. Rather than an ITV employee, as HMRC had claimed. Over the last few years, HMRC has brought several cases against high profile broadcasters. This judgement is a setback for them.

The judgement comes ahead of new difficulties for businesses who will legally have to determine the IR35 status of contractors using limited companies, from April 2020.

HMRC have lost four out of five IR35 cases since 2018, according to deputy policy director at the Association of Independent Professionals and the Self-Employed, Andy Chamberlain. He said, “This judgment should be a wake-up call to government that it cannot expect businesses to understand a tax law that it cannot even implement itself.”

Managing director at Brookson Legal, Joe Tully, said, “Lorraine Kelly has won this case because HMRC wasn’t able to prove that ITV was controlling her as if she were an employee. The question of control is key to determining if a person is employed or self-employed and clearly HMRC has struggled with interpreting this.”

Responding to their loss HMRC said the tax authority was disappointed that the tribunal had found that IR35 rules did not apply, in this case. It said, “We will carefully consider the outcome of the tribunal before deciding whether to appeal.”