Under control? Developments in the IR35 cases

Earlier this month, the Upper Tribunal heard an appeal against the First-tier Tribunal’s (FTT's) 2018 decision that former Look North presenter Christa Ackroyd should have been taxed as an employee under IR35. The decision, when it is released, will represent a good opportunity for the courts to provide clarity on the application of the “control test” in establishing employment status – and not just for presenters.

IR35 looks at whether individuals who provide services through a personal company have a relationship with the end-user which would be one of employment if the services were provided directly.

This is a multi-factorial question, but a key ingredient in determining the employment relationship has historically been an element of control. Employees must be subject to another’s control “in a sufficient degree to make that other master”.

While this is rarely a straightforward analysis in the modern world of work, the FTT’s reasoning in the Christa Ackroyd case was not free from criticism and it will be interesting to see whether it survives on appeal.

In particular, the FTT’s emphasis on the presenter’s de facto (albeit non-contractual) obligation to comply with BBC editorial guidelines as an indicator of control might seem odd. BBC guidelines govern the entire output of the BBC, regardless of whether it originates from an employee or not.

The reasoning in subsequent celebrity IR35 cases (each of which was decided in the taxpayer’s favour) has reflected this theme.

In April, the FTT rejected an argument that the obligation of Kaye Adams (known for, inter alia, Loose Women) to comply with OFCOM guidelines in her media output represented control by, in that instance, the BBC. An organisation’s efforts to prevent an individual from bringing it into disrepute can apply just as much to an independent contractor as an employee.

Similarly, Lorraine Kelly’s obligation to comply with the same guidelines was irrelevant to the question of control over her work because its application was universal and unrelated to employment status. The FTT pointed out that industry regulations bind individuals “in many professions irrespective of whether an individual is employed or self-employed”. It remains to be seen whether this logic will make an appearance in the Upper Tribunal’s decision regarding Christa Ackroyd.

When considering control, consideration is needed to be given to the practical realities of particular industries. Autonomy is a key factor in the distinction between (i) services provided by a contractor and (ii) a contract for services provided by an employee. Ultimately, this is about the degree of oversight in terms of the format of delivery and methodology of services, as well as timing and location etc. Both employers and contractors who operate in industries subject to regulatory guidelines will be hoping for some clarity to navigate these challenging rules – something that has certainly been lacking in the outcome of FTT cases in recent months.