What can we learn from high-profile HMRC IR35 cases?

The off-payroll working rules (also known as IR35) are complex, and they can be hard to fully understand unless you’re knowledgeable about tax legislation and compliance when working as a contractor through a personal service company.

In recent years HMRC has been aggressive in going after some high-profile individuals the organisation deems to have broken IR35 rules, but what can we learn from these cases about how the tax office is approaching this issue?

HMRC’s IR35 ‘specialist compliance team’

Earlier this year, HMRC confirmed that it had a ‘specialist compliance team’ focused on IR35 investigations. The goal of the team was to look for underpayment of tax and National Insurance Contributions (NICs) where a business had engaged individuals as self-employed contractors, rather than as employees. 

The 45-person strong team has been leading HMRC’s crackdown on these arrangements, with some high-profile cases making their way to court.

Despite the responsibility of determining whether or not a contractor is inside or outside IR35 shifting to the company rather than the individual, HMRC retains the right to retrospectively investigate contractors, dating back to when they were liable for the determination, and the tax office is still working through historic cases.

3 high profile IR35 cases

There are some high profile cases of HMRC pursuing contractors for underpayment of taxes and NICs, most notable television presenters Kaye Adams and Adrian Chiles, and former footballer and sports presenter Gary Linekar—but what can we learn from each of these cases?

Kaye Adams

HMRC spent the best part of a decade unsuccessfully pursuing a case against Loose Women presenter Kaye Adams’ personal service company Atholl House Ltd in relation to her IR35 tax liability.

The First Tier Tribunal (FTT) found in favour of Atholl House Ltd in November 2023 after four previous hearings: 

• originally at the FTT again (March 2019), which found in favour of Atholl House
• the Upper Tribunal (November 2020), also finding in favour of Atholl House
• the Court of Appeals (February 2022), which referred the decision back to the Upper Tribunal
• the Upper Tribunal which sent the case back to the FTT as the most appropriate forum

After nine years and hundreds of thousands of pounds spent in litigation, HMRC were unable to prove that Adams had broken the rules, with the tribunal hearings ultimately finding she had been operating compliantly. 

This case highlights some key questions over HMRC’s understanding of its own rules.

Gary Linekar

Kaye Adams’ court victory follows almost exactly a year after the First Tier Tribunal found in favour of Gary Linekar in his battle against HMRC.

Linekar’s case related to almost £5million in underpayment of taxes, which the tax office deemed should’ve been paid in relation to two contracts with the BBC and one with BT Sport, all of which were arranged through his personal service company Gary Linekar Media.

This case had been running for six years from 2017 to 2023, before the FTT found in favour of Linekar in March last year. However, HMRC appealed again, which means the saga continues.

Adrian Chiles

Another high profile celebrity who has spent 2024 fighting HMRC over their IR35 tax liability is Adrian Chiles.

The case against the television presenter relates to a £1.7million liability, and according to HMRC Chiles had incorrectly operated outside of IR35 when he worked for the BBC, ITV and Radio 5 Live through his personal service company Basic Broadcasting Ltd.

The First Tier Tribunal found in favour of Chiles in 2022, but the Upper Tribunal referred the case back to the FTT in June after the judge found that legal errors had been made in the original decision.

Whether or not these ‘errors of law’ will lead to a different decision from the FTT second time around is yet to be seen, but what this case does show is that HMRC are willing to spend a lot of time and money on making examples of high profile individuals—even after their unsuccessful cases against Kaye Adams and, up to now at least, Gary Linekar.

Kaye Adams, Gary Linekar and Adrian Chiles are not the only celebrities being targeted as part of HMRC’s historic crackdown into IR35 breaches, with TV and radio presenter Jeremy Vine currently being investigated, while rugby commentator Stuart Barnes and football pundit Neil McCann both lost their cases this year. 

HMRC’s various defeats in court shows the interpretation of their own rules is far from perfect, but their continued pursuit of high profile individuals suggests they’re not dissuaded from going after people they deem to have broken the rules. This shows the importance of contractors doing everything they can to stay compliant with IR35 rules.

At Warr & Co we’ve years of experience in managing the tax and accounts of sole traders, as well as contractors operating through personal service companies. To find out more about how we can help you to stay compliant with your tax obligations, as well as take advantage of all the relief and benefits available to you, why not book a free, no obligation consultation today?