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IR35 – more guidance?


IR35 is tax legislation designed to combat tax avoidance by workers supplying services to clients via an intermediary. The rules apply where an individual provides services to a client through a Personal Services Company (PSC), and would be regarded as one of the client’s employees had the individual not contracted through the PSC.

The rules are complex, and legislation is evolving as the Government enters into further consultation and new cases appear before the Tribunal.

Paul Hawksbee

In a recent case, radio presenter, Paul Hawksbee under his limited company, Kickabout Productions Limited, successfully argued in the First Tier Tax Tribunal (FTT) that he was genuinely self employed. Importantly, the Tribunal held that due to the nature of the work involved, i.e. a scheduled radio show, TalkSPORT did have control over the time and location of the work being carried out, but this was the full extent to which they got involved. Mr Hawksbee was responsible for the work carried out including the topic, guests, content and the format of each show.

The FTT also stated that the fact that Mr Hawksbee did not provide a substitute was not deemed to be an important factor due to the fact that “TalkSPORT were contracting for the unique expertise of Mr Hawksbee.

In summary the FTT found in favour of Mr Hawksbee on the grounds that

  • Talksport’s paid a fee for each show delivered, with no retainer or bonus;
  • there was no obligation on Talksport to provide work;
  • the controlled services were largely restricted to delivering the show.
  • Mr Hawksbee had no rights to holiday, sick pay, or pensions and no provisions regarding medicals, training; and
  • He was not integrated into Talksport.

Concluding, (FTT) held: ‘Looking at the picture as a whole, we conclude that the relationship in this case was not one of employment but rather was a contract for services.’

The employment status test

The key factor in determining whether IR35 applies is to ignore the existence of the PSC, and then test whether there is an employment relationship (as opposed to a self-employed/consultant relationship) – the hypothetical contract.

There are three primary factors to consider when determining whether an employment relationship exists:

  • Mutuality of obligation – This is where the employer must be obliged to provide the work and the employee must be obliged to carry out the work in return for pay.
  • Personal service – This means the individual is obliged to perform the work personally.
  • The employer must exercise a sufficient degree of control over the employee in the way that the individual performs the work including when, where and how.

However, no one factor is determinative. The courts will also look at other factors, including:

  • Whether the individual is in business on their own account
  • Whether the individual provides their own materials
  • Whether the individual is integrated into the business
  • The length of the engagement
  • Any benefits received by the individual
What should contractors do?

In the meantime, this continues to be a challenging area. It highlights the importance for contractors to carry out their due diligence before and during a contract as well. They should obtain advice from IR35 experts to ensure they are compliant rather than face significant penalties and fines.

If you have any questions please contact Sejal Raja on sejal.raja; who was instructed by Paul Hawksbee.


This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.