The £61M IR35 Blunder: How Poorly Drafted Legislation is Crippling ITV and the Creative Sector

In a week where ITV announced 200 redundancies in its Daytime division to cut costs, a far larger financial threat looms over the broadcaster. According to ITV’s 2024 annual report, a potential £61 million tax bill from HMRC, linked to the controversial IR35 and off-payroll working rules, dwarfs the savings sought through layoffs. This liability, twice the amount ITV aims to save through redundancies and equivalent to wiping out its 11% year-on-year profit (EBITA) increase, underscores the catastrophic consequences of poorly drafted tax legislation on Britain’s creative industries.

The IR35 Debacle: A Legislative Misstep

Introduced in 2000 and significantly reformed in 2017 and 2021, IR35 was designed to ensure that self-employed workers or those operating through intermediaries, like personal service companies (PSCs), pay taxes comparable to employees when their working arrangements resemble employment. The intent was to tackle tax avoidance, but the execution has been a masterclass in bureaucratic overreach and ambiguity.

 

The ITV case highlights the legislation’s flaws. The £61 million liability, dating back to 2016, likely stems from HMRC’s retrospective assessments of freelancers and contractors hired by ITV, many of whom are sole traders or work through intermediaries. The creative sector, reliant on flexible, project-based talent, has been hit hardest by IR35’s vague definitions and inconsistent enforcement. ITV’s predicament is not unique but emblematic of a broader issue: IR35’s poorly crafted rules have created a minefield for businesses and freelancers alike.

A Vague and Punitive Framework

At the heart of IR35’s failure is its lack of clarity. Determining whether a worker falls “inside” or “outside” IR35 hinges on complex criteria like control, mutuality of obligation, and substitution rights. These terms are subjective and open to interpretation, leaving companies like ITV vulnerable to HMRC’s retrospective challenges. The 2021 reforms shifted the responsibility for determining IR35 status from freelancers to hiring organisations in the private sector, placing an immense compliance burden on businesses. For ITV, this has translated into a £61 million sword of Damocles, threatening financial stability.

 

The legislation’s retrospective nature is particularly egregious. HMRC’s ability to pursue tax liabilities back to 2016 punishes companies for decisions made in good faith under unclear guidelines. ITV, like many in the media industry, relies on a flexible workforce of presenters, producers, and technical staff. These workers often operate as freelancers to meet the industry’s project-based demands. Yet, IR35’s blunt approach fails to account for the nuances of creative work, where short-term, specialised engagements are the norm, not the exception.

The Creative Industry’s Collateral Damage

ITV’s £61 million liability is a stark reminder of IR35’s chilling effect on the creative sector. Freelancers, fearing misclassification, face reduced opportunities as companies scale back hiring to avoid tax risks. The redundancies at ITV’s Daytime division, while framed as cost-cutting, reflect a broader trend of risk-averse restructuring. The creative industries, a cornerstone of the UK economy, thrive on agility and innovation—qualities stifled by IR35’s rigid framework.

 

The financial impact is staggering. ITV’s potential tax bill exceeds its cost-saving measures and wipes out its profit growth, threatening investment in new content and jobs. Smaller production companies, with fewer resources to navigate IR35 compliance, face even greater risks, potentially driving consolidation or closures in an already competitive sector.

A Call for Reform

The ITV case is a clarion call for IR35 reform. The legislation’s lack of precision, retrospective enforcement, and disproportionate penalties have created a climate of fear and uncertainty. To address this, policymakers must:

 

1. Clarify Definitions: Provide clear, industry-specific guidelines on what constitutes “inside” versus “outside” IR35, reducing reliance on subjective interpretation.
2. Limit Retrospective Claims: Cap HMRC’s ability to pursue historic liabilities, protecting businesses that acted in good faith.
3. Support Freelancers: Introduce exemptions or simplified processes for sectors like media, where freelance work is intrinsic to operations.
4. Reduce Compliance Burdens: Streamline IR35 assessments to ease the administrative load on businesses, particularly SMEs.

Conclusion

ITV’s £61 million tax liability is not just a corporate headache; it’s a symptom of IR35’s fundamental flaws. Poorly drafted and punitively enforced, the legislation is strangling the creative sector, forcing layoffs, stifling innovation, and threatening financial stability. As HMRC’s net tightens, the government must act to reform IR35 before its collateral damage irreparably harms one of Britain’s most vibrant industries. The creative sector deserves better than a tax regime that punishes flexibility and ambition.

Word count: 320

Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC Is Judge, Jury and Executioner - Echoes of #PostOfficeScandal

This is a disgraceful press statement.

Firstly, it is not for @HMRCgovuk to decide whether something is legally binding or not. That is a decision for the courts.

It is time HMRC understood they are not judge and jury on these cases. pic.twitter.com/b9NRqHG9Pd

— David Davis (@DavidDavisMP) January 24, 2024

HMRC, that three-headed hydra of a government agency, and their questionable handling of the Kaye Adams case. It's a story dripping with echoes of the #PostOfficeScandal, leaving a stench of bureaucracy and broken lives in its wake.

Kaye Adams found herself on the wrong side of HMRC's algorithm and IR35. A computerised system, prone to glitches and gremlins, spat out a monstrous tax bill, enough to swallow her livelihood whole. Kaye, like many others caught in the crosshairs of this digital dragon, fought back. She challenged the assessment, presented evidence, and pleaded her case over 10 years. But HMRC, deaf as a badger at a rave, wouldn't budge. They were judge, jury, and executioner, wielding their rubber stamp of authority like a cudgel against a fly.

Now, this wouldn't be the first time the state has been accused of playing God with people's lives. Remember the #PostOfficeScandal? Hundreds of innocent sub-postmasters were hounded, bankrupted, and even imprisoned thanks to faulty software and a culture of institutional arrogance. It was a dark chapter, one that exposed the state's penchant for crushing the little guy under the weight of its bureaucratic boot.

Here we are again, with Kaye Adams facing a similar David-and-Goliath battle. HMRC, with its bottomless coffers and army of bean counters, looms large over her, a monolith of indifference. They throw around legalese and procedure like confetti at a Tory fundraiser, burying the human cost of their actions under mountains of paperwork.

Kaye found her voice, joining forces with other victims of HMRC's algorithmic injustice. They're shining a light on the agency's dark corners, demanding accountability and reform. This ain't just about Kaye's tax bill, it's about reclaiming power from a system that's rigged against the ordinary bloke.

Here is what she had to say:

"Whilst I am extremely pleased that HMRC has decided not to roll the dice on a fifth time lucky shot on my case, I remain utterly horrified at the behaviour of this department. The statement they released to the press, without my knowledge, twenty minutes after informing me of their decision, says they don’t think it would be ‘proportionate’ to appeal in this case.

"It was never proportionate.

"By the end of my first hearing five years ago, I had burned through more money in legal fees than the tax in dispute. Where was HMRC’s concern over proportionality when they appealed to Upper Tribunal and then appealed again to the Court of Appeal and then again hauled me over the coals in the First Tier Tribunal for a second time?

"Not once did they score a victory over me, yet they kept going. And now they have the audacity to suggest, my case does not set legal binding precedent. It is outrageous.

"Everyone in the media industry knows IR35 is a mess. Freelancers working for as few as ten days a year for engagers are being forced onto PAYE with no employment rights or benefits, HMRC knows IR35 is a mess. It knows it has been playing fast and loose with taxpayers’ money to push through an interpretation of the law that it has frankly invented and it seems these faceless bureaucrats are accountable to no one.

"They have the power to ruin good, honest hard-working people’s lives with no consequences.

"It is not just lives they are trashing, HMRC is making a mockery of the legislation. Self- employed status is now determined according to the pressure applied by HMRC and risk management on the part of media companies, not according to the law.

"This is a pyrrhic victory for me. I have won my case against HMRC and I have spent on legal fees nearly £300,000, which should have been in my pension. Justice eh!"

Remember, power concedes nothing without a demand. It's time to hold HMRC to account, to make them answer for the lives they've destroyed and the businesses they've crushed. Let's make sure Kaye Adams' case isn't another forgotten footnote in the agency's long history of blunders. Let's make it a catalyst for change, a rallying cry for the voiceless, a reminder that even the smallest pebble can topple the mightiest giant.

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Buckland Pushes To Axe IR35

 

As per Sir Robert Buckland (former Lord Chancellor):

The Summer offers an important opportunity for policy development ahead of next year’s General Election and Conservative manifesto.  As the Prime Minister has rightly placed economic growth as one of his five priorities for this year, we need to raise our eyes to the horizon and plan for the Britain of 2029.  The need to offer a way forward for self-employed people and small businesses is clear.

Last year’s Growth Plan has been consigned to political ignominy but, despite its flaws, it did contain some promising and sensible policies.  One such policy was its proposal to “take the complexity out of the tax system” by reforming off-payroll working rules – more commonly – and controversially – known as IR35. 

While nobly intended to tackle tax avoidance by contractors who work as employees, the legislation’s burdensome and complex nature mean it has become something of a Frankenstein’s monster.  The deleterious impact it has had on dynamism, entrepreneurship, jobs, and growth means that there is no better time to slay it once and for all.

One of the most immediate problems with IR35 is the treatment of contractors as “disguised employees” for tax purposes.  This discourages independent professionals from taking on projects and limits their ability to negotiate terms and work arrangements freely.  The resulting lack of flexibility stifles innovation and prevents enterprising individuals from operating in a way that allows them to realise their full potential. 

 A double-edged sword, IR35 places a corresponding administrative and financial burden on businesses that engage with contractors.  Companies are required to assess the employment status of each contractor they hire, often leading to costly investigations and legal disputes.  The ambiguity of the rules makes it difficult for employers to make accurate determinations, strengthening the chokehold they have around businesses.

 The cumulative effect of IR35 is that contract work has become less desirable, with some opting instead for permanent employment or work outside the United Kingdom.  It is often said that diversity is a great strength, and in no context is this truer than in a modern economy like ours.  The drying of the pool caused by IR35 has restricted the ability of British employers to fill crucial skill gaps, while we have lost out on homegrown talent to more competitive economies. 

The reform of IR35 would not just add substance to the Prime Minister’s second priority of growing the economy, it could form a key plank of the Work and Pensions Secretary’s laudable mission of getting the economically inactive back to work.  The scale of the challenge of bringing the once-employed back into the workforce post-Pandemic means the country simply cannot afford the barrier to enterprise that IR35 has become.  Indeed, my role leading a review into how Government policy can boost the employment prospects of autistic people has impressed upon me the importance of empowering those with the ability to work to take the leap and do so.

 With the next General Election fast approaching, another look at the off-payroll working rules would be an act of political expediency.  The onerous regulations hit a natural constituency of the Conservative Party’s hardest, and its support will be crucial for Conservative prospects come next Autumn.  As the Labour Party increasingly positions itself as the party of business, it would be foolish not to review IR35 as part of the party renewing its appeal to natural supporters.

It is time to reshape and rethink regulation surrounding the engagement of contractors, paving the way for a form of taxation that encourages dynamism and flexibility at a time when growth has never been needed more.

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Lineker Wins £4.9M Tax Case Against HMRC

Lineker wins his £4.9m tax appeal on the contract law doctrine of privity. FTT held there were contracts "directly between" him and BBC & BT which means that IR35 that applies “where services are provided NOT under a contract directly between client and the worker” doesn't apply. pic.twitter.com/SM9zapRG6F

— Osita Mba (@DrOsitaMba) March 28, 2023

HMRC will most assuredly appeal this, if they don't IR35 is fucked!

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Lineker's Cunning Tax Plan

 

The UK media has got itself into a right old state over Gary Lineker's recent outbreak of Nazi Tourettes, in which he equated proposed changes in the UK asylum regulations with Germany in the 1930s.

This in turn caused a fall out with the BBC, and a spat about whether he was allowed to "speak his mind" etc etc. All dutifully salivated over by our pathetic media.

However, beneath this very public spat lies a possible method in Lineker's madness. The media have dutifully ignored that fact that he is currently in an IR35 dispute with HMRC, over a not so trifling sum of £5M. It hinges on whether Lineker can prove he really is freelance, as opposed to a full time employee. His little bust up with the BBC is designed to show he is freelance, thus saving him a tidy £5M.

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Hunt Nixes Repeal of IR35 Reforms

 

Back to the future!

It's going to be very busy for those in the accounting and tax industry!

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

IR35 Reforms To Be Scrapped

"We will repeal 2017 and 2021 reforms to IR35."

Kwasi Kwarteng 23 September 2022

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Schroedinger's IR35 Review

 

Liz Truss may/or may not review IR35 if she becomes PM.

She told The Sun that IR35 reform, introduced under then-chancellor Rishi Sunak – her rival for No 10, is wrongly “all about trying to treat the self-employed the same as big business.”

Truss may have been referring to the IR35 assessments that organisations now run needing to be conducted by contractors, where those contractors’ clients are neither mid-sized nor large.

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Government Owes HMRC £263M

It seems that Whitehall departments owe HMRC £263M in unpaid taxes after the Government failed to comply with its own rules for off-payroll workers.

The Public Accounts Committee has lambasted central Government for "widespread non-compliance" with so-called IR35 rules, which require companies to determine the tax status of freelancers and contractors.

Public sector departments owed HMRC £236m in back-taxes for workers wrongly assessed as self-employed for the tax year 2020-21, the committee estimated.

It is quoted by the Telegraph:

"Such widespread non-compliance is not acceptable, particularly as government bodies should be best placed to understand the rules and communicate with HMRC."

HMRC had exacerbated the the situation by "rushing implementation" of the IR35 rules and providing "poor guidance" with no means of appealing a tax status for workers. 

The Public Accounts Committee accused HMRC of having done "little to understand the wider impact of the reforms on workers or labour markets" and warned the taxman had been "too dismissive" of people and businesses reported being adversely affected by the rules. 

Dame Meg Hillier, Labour MP and chairwoman of the committee, said: 

"After years of fiddling with these reforms and with central government spending hundreds of millions of pounds to cover tax for individuals wrongly assessed as self-employed, the fundamental problems underlying UK taxation of work remain.

It is now up to HMRC to demonstrate that the system can work fairly in the real world; to prove that it is correctly claiming revenues under the system and that the additional revenues raised are worth the costs and unintended consequences in the labour market.

While workers in the gig economy have challenged their work and tax status in the courts, there is no recourse for workers deemed subject to IR35 tax rules despite the confusion and non-compliance that persist even in central government itself."

If a contractor or freelancer believes they have been given the incorrect tax status by a hiring company, they can challenge the decision with the business. The company must respond within 45 days, but if it refuses to change its mind the worker has no further route to appeal. 

HMRC said: 

“These reforms have succeeded in making the tax system fairer, with more people who work like employees paying tax like employees, levelling the playing field for everybody else and bringing in the tax that is due under the law."

In other words HMRC isn't listening!

Tax does have to be taxing.

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Adrian Chiles Wins Tax Case Against HMRC

The TV presenter Adrian Chiles has won a seven-year battle with HMRC, and saved £400K-500K in taxes. 

HMRC claimed that he was not a freelancer when working for the BBC and ITV between 2012 and 2017, despite Mr Chiles having worked as a contractor through his own limited company since 1996. 

HMRC argued he should have paid more tax as an employee of the broadcasters, where he worked on BBC programmes such as The One Show, Match of the Day 2 and The Apprentice: You're Fired, as well as on Daybreak and as a football commentator at ITV.

HMRC said Mr Chiles owed £1.2m in income taxes and almost £500,000 in National Insurance.

The case was part of a wider crackdown on “disguised employees” who reduce their tax bills by funnelling their income through personal service companies. 

Such arrangements allow an individual to set up a company and pay themselves via a mixture of salary and dividends to save on tax, even if they do not hire any staff. 

Employees pay income tax at 20pc of earnings up to £50,270 and 40pc above, plus NI at 12pc, while contractors typically pay corporation tax at 19pc and lower NI rates of 9pc, while dividends are taxed at rates starting from 7.5pc.

However, a tribunal ruled there was “no suggestion Mr Chiles set out to avoid paying tax” through his company Basic Broadcasting Limited. 

Dave Chaplin of tax advice firm IR35 Shield is quoted by the Telegraph as saying that Mr Chiles had been the “victim of a very poorly run investigation by HMRC inspectors”.

He added: 

“The tax office has put him through the wringer, both mentally and financially, due to the massive costs of having to defend himself, despite always paying his taxes correctly.”

Despite winning the case, Mr Chiles will still have to pay his own legal fees. 

A spokesman for HMRC said the tax authority would “carefully analyse the outcome of the tribunal before considering next steps”.

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Investigation into The Implementation of IR35 Tax Reforms

 

The NAO have published their report into IR35 tax reforms.

They conclude:

"Rolling out the IR35 reforms to the public sector first has meant an opportunity for HMRC to learn lessons and adapt its approach. The 2017 reforms have achieved their primary purpose of reducing non-compliance and therefore increasing tax revenue. However, the public sector faced challenges with the initial roll-out: public bodies had little time to prepare; some found it difficult to use the original guidance and tool that HMRC had provided; and there was a limited understanding on all sides of how much time and resource were needed to get it right. As a result, it was highly likely that some public bodies would make mistakes.

By changing its approach, both in the public sector and when extending the reforms to the private and third sectors, HMRC appears to have learned several key lessons and addressed some of the more significant difficulties, including enabling more support and time for the transition. Questions remain about the system for addressing incorrect determinations, with routes of appeal untested and tax burdens in cases of non-compliance likely to fall on employers. There are also differences between the public and private sectors that increase the inherent challenges. HMRC faces new risks that will make it harder to identify, monitor and address non‑compliance, including larger and more complex labour markets in the private sector. HMRC will need to manage these risks if it is to ensure the reforms are successful."

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC Taxes HM Courts and Tribunal Services

 

HMRC have slapped HM Courts and Tribunals Service with a £12.5m tax bill. 

The department was hit with the bill by HMRC in relation to incorrect assessments of workers’ employment status (IR35 rears its ugly head again!), according to its annual report for 2020/21.

In 2019, the Ministry of Justice was told to revisit employment status determinations made between April 2017 and April 2020.

The tax liabilities related to undisclosed number of workers who were previously concluded as operating outside of the off-payroll working rules by HMRC’s Check Employment Status for Tax (CEST) tool.

On the plus side, HMCTS won't end up paying the bill, the ultimate liability rests with us the taxpayers!

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC is "Shambolic"

HMRC missed the deadline to appeal locum doctor George Mantides’ partial IR35 case victory, according to an Upper Tier Tribunal (UTT) judgement published last week.

It stated that HMRC had “sought permission” to appeal against a First Tier Tribunal (FTT) decision in 2019 that found the services Mantides provided Medway Maritime Hospital in 2013 fell outside IR35. 

However, its application was “submitted late and the FTT declined to grant an extension of time.”

“A further application by HMRC to this tribunal [UTT] was refused both on the papers and subsequently following an oral hearing,”

Seb Maley, CEO at Qdos (IR35 specialist), said:  

“That HMRC missed the deadline to appeal the contract Mantides held with Medway Maritime Hospital [MMH] tells you everything you need to know about the efficiency of the tax office. 

Not only does HMRC regularly struggle to identify if a contract belongs inside or outside IR35, but they aren’t organised enough to lodge an application to appeal despite it being something as significant as an Upper Tier Tribunal. It’s shambolic.”

While HMRC were due to appeal the MMH verdict, Mantides appealed an FTT ruling which found his services to Royal Berkshire Hospital (RBH), provided via his limited company – George Mantides Ltd – were inside IR35 and therefore liable for Income Tax and National Insurance contributions.

The UTT found that there was not sufficient evidence for the FTT to come to its conclusion that Mantides’ contract with RBH fell inside IR35. 

The judgement said that the UTT was satisfied there “there was nothing in the evidence to support the FTT’s conclusion as to the notice period and the obligation on RBH to provide work to Mr Mantides.”

However, it has delayed reaching a verdict, citing it is waiting for the outcome of another tax case recently heard by the Court of Appeal – PGMOL vs HMRC.

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Government Fails IR35 Test

 

It seems that two government departments have fallen foul of HMRC’s “Orwellian” contractor taxation rules concerning off-payroll worker status (aka IR35), leaving them with bills topping £100m.

The Department of Work and Pensions (DWP) first made the admission in its 2020-21 annual report that it had used HMRC’s Check Employment Status Tool (CEST) to assess engaged off-payroll workers’ employment status or “correct tax treatment”.

It owes HMRC £88m for “historic errors” in assessing tax liability for its off-payroll workers over the period 2017-21.

Squirrelled away under “Fruitless payments” in the report, the note said: 

“In March 2020 DWP received a Letter of Offer from HMRC that formally concluded their review of IR35 implementation in DWP. The result was agreement on historic errors and acceptance by DWP of a liability for tax/NI [National Insurance] plus interest for the financial years 2017-18 (£21.1m), 2018-19 (£36.7m) and 2019-20 (£29.7m). A liability for 2020-21 (£0.4m) was also subsequently agreed.”

Days later, the Home Office quietly published its own annual report with a similar admission it had botched assessments of its contractors’ employment and tax status between 2017 and 2021.

It admitted being “careless” in its application of the off-payroll rules, and was penalised £4m along with a £29.5m bill for incorrect assessments plus interest on the accrued amounts.

Clearly the government doesn't understand how IR35 rules work. If the government does not understand its own rules, how the hell are the rest of us meant to understand them?

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

IR35 Webinar

Are you an agency or a client who needs to operate #IR35 (off-payroll) and may be responsible for deducting Income Tax and National Insurance contributions for contractors? Join our webinar for fee-payers on 24 February at 9.45am or next week on 5 March. https://t.co/ujzBYzhbZ5 pic.twitter.com/Up4GUHx3BI

— HM Revenue & Customs (@HMRCgovuk) February 23, 2021

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's IR35 "Soft Landing"

 

The IR35 issue briefing on HMRC’s compliance approach was released on Tuesday as part of HMRC’s effort to ensure compliance with the new off-payroll working rules, which come into effect 6 April. The six-week lead time is an improvement compared to recent late and last-minute guidance documents, but then HMRC has had nearly three years to prepare its plans for the next phase of IR35.

HMRC confirmed it would adopt a light touch approach to penalties in year one. To dampen down contractor fears over retrospective adoption of the rules, HMRC vowed not to use information collected under the new regime to open any enquiries into returns for previous tax years – unless it suspected fraud or criminal behaviour.

HMRC as quoted by AccountingWeb:

“The scope of our compliance activity is not solely related to the application of the off-payroll working rules, but includes all arrangements that result in less tax being paid than should be the case, such as tax avoidance schemes that claim to avoid the rules.”

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Government Ignore Lords wrt IR35

“The government remain fully committed to introducing these reforms to ensure that people working like employees but through their own limited companies pay broadly the same #tax as individuals who are employed directly,” said Norman in the virtual commons debate #IR35 #tax #HMRC https://t.co/sWL4BKOMRT

— Watt Busfield Tax Investigations LLP (@rbusfield) April 29, 2020

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly
• Premiums are Annual Premiums.
• Premiums are inclusive of 12% IPT. 
• Premiums and IPT are due in full in advance / at commencement of scheme.
• There is a NIL excess on all policies.

Please click here for details.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Government Urged To Completely Rethink IR35

The government has been urged to “completely rethink” its controversial off-payroll working rules after a Lords select committee found the system to be unfair on both contractors and businesses.

A 67-page report from the House of Lords economic affairs finance bill sub-committee, published today (April 27), said the extension of the off-payroll working rules — commonly known as IR35 — put too great a burden on businesses and was unfair on contractors.

Lord Forsyth of Drumlean, chair of the committee, is quoted by the FT:

“Our inquiry found these rules to be riddled with problems, unfairnesses, and unintended consequences. 

The potential impact of the rules on the wider labour market, particularly the gig economy, has been overlooked by the government. It must devote time to analysing all of this. A wholesale reform of IR35 is required.”

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Please click here for details.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

IR35 Change Delayed Until April 2021

Chief Secretary to the Treasury Stephen Barclay has told MPs that the IR35 rule change would now come into effect on 6 April next year.

Mr Barclay, speaking in during a Commons debate on the Budget, said the change was part of the measures announced to protect the economy from the coronavirus outbreak.

He said the decision was “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”
Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Please click here for details.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"