Broadcaster Eamonn Holmes has lost an appeal against a tax bill over his employment contract with ITV when he presented its flagship morning show This Morning.
Holmes contested a claim from HM Revenue & Customs, first heard at the First Tier Tribunal Tax Chamber in June 2018, that contracts held between his personal services company, Red White and Green Limited, and ITV had amounted to an employment relationship, rather than self-employment.
The total amount of tax at stake is not in the judgment, but documents show he invoiced ITV for about £1.55mn between 2011 and 2015. The judges agreed with HMRC that the nature of Holmes’s contract meant that he was effectively an ITV employee, with income tax and national insurance payable.
The ruling by the Upper Tribunal comes days after sports broadcaster Gary Lineker won a £4.9mn tax appeal against HMRC. The media stars are just two of a host of contractors caught in the government’s push to crackdown on so-called “disguised employees”, who charge for their services through a company. In the past decade, ministers have tightened rules, known as IR35, which regulate the tax status of contractors and determine whether or not they are employees.
Some tax experts view the outcome for Holmes as unfair because it stands in contrast to other presenters who have fought similar cases — and won their appeals, including ITV presenter Lorraine Kelly, Loose Women presenter Kaye Adams and TV and radio presenter Adrian Chiles.
“I actually think the overall result for Holmes is wrong,” said Dave Chaplin, chief executive of tax compliance company IR35 Shield. He added that the difficulty was that the upper-tier tribunal’s rules did not allow new evidence to be introduced — only appeals on points of law could be heard.
Tim Stovold, head of tax at accounting firm Moore Kingston Smith, noted that Holmes’s case had similarities with Sky Sports rugby pundit Stuart Barnes, who won his case.
“Although these cases had some similarities, they had very different outcomes leaving much uncertainty for self-employed workers,” Stovold said.
“To remove this uncertainty, the government should revisit the idea of a statutory test of employment, which can be objectively determined to make the IR35 regime function with certainty for the first time in its more than 20-year existence.”
Lineker won his case against HMRC, with Judge John Brooks ruling that because he had direct contracts with the two broadcasters, the IR35 rules would not apply to him.
Lineker’s case was unusual because he contracted via a general partnership, not a limited company, so he had already paid high levels of income tax. Had he been caught by the IR35 rules he would have had to pay more in national insurance.
“Legal cases like Gary Lineker’s are extremely expensive for HMRC to run, so getting in place rules that collect the right amount of tax and are easier to understand is an imperative,” said Penny Simmons, legal director of Pinsent Masons, a law firm.
“The fact that there are so many high-profile cases going through the tribunal system shows that there is still far too much uncertainty over how this area of tax works,” she added.
