Kaye Adams wins nine-year court battle against IR35 determination by First Tier Tribunal
By Justine Riccomini, Head of Tax (Employment and Devolved Taxes)
15 January 2024
We look at Kaye Adams’ latest victory – but is a nine-year battle long enough?
Nine years in the making
After nine years of to-ing and fro-ing, and at a cost to her of around £200,000, BBC TV presenter Kaye Adams finally won against HMRC. She succeeded in convincing the First Tier Tribunal (FTT), not for the first time, that the work she had undertaken for the BBC was carried out by her as an individual working under a self-employed contract, and not through her personal service company, Atholl House Productions Ltd.
Five tiers of court hearings – is it really necessary?
The decision which had been remitted back to the FTT and was decided on 29 November 2023, was the fifth hearing which took place to resolve the dispute between Ms Adams and HMRC. The case journeyed up to the Court of Appeal where it was remitted back to the FTT via the Upper Tribunal. All of which seems to be extremely heavy-going to decide whether two tax years’ worth of earnings for one individual was caught by IR35 or not.
The case has followed the following path:
| Date | Court | Decision |
|---|---|---|
| March 2019 | FTT | In favour of Atholl House |
| November 2020 | UT | FTT decision set aside – remade decision in favour of Atholl House |
| February 2022 | CA | Decision set aside; referred back to UT to remake decision |
| October 2022 | UT | Remitted to FTT as the most appropriate forum |
| November 2023 | FTT | In favour of Atholl House |
What was the court asked to decide?
The FTT was asked to consider whether, if the work undertaken by Ms Adams had been provided directly to the BBC and not through the Atholl House intermediary, that work would be under a deemed employment contract or not.
This resulted in the so-called “third limb” test being carried out by the FTT, as follows:
- Stage 1: What were the terms of the actual, factual contract and how were the services delivered in reality?
- Stage 2: What are the terms of the hypothetical contract?
- Stage 3: Is the hypothetical contract a contract of employment, using the Ready Mixed Concrete case tests as a measure?
The FTT decided that on balance there were more pointers towards self-employment than there were towards employment. These included:
- Ms Adams’ ability to freely carry out other separate engagements/explore other opportunities.
- Ms Adams’ financial/economic independence from the BBC.
- Ms Adams not having been treated as a run of the mill employee by the BBC throughout the period in question.
- All written agreements showed that neither party believed or intended that an employment relationship existed.
Conclusion
Naturally, HMRC could choose to appeal this case – they have 56 days to appeal. The case is not binding, given that it is a FTT case decision – however, one hopes that for Ms Adams’ sake, the final credits have rolled on this long-running saga. Clearly the costs to both sides outweigh the tax at stake (£125,000, but more like £70,000 after add backs) but on occasion, HMRC’s own Litigation & Settlement Strategy overrides the best use of taxpayer’s money and forcibly pursues what most would consider to be lost causes.
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