Empowering the Freelance Economy

How Adrian Chiles Won His £1.7m IR35 Tax Appeal (for Now): the key freelancer takeaways

Having multiple clients is just one way to ensure you keep outside IR35. /Photo by Andrea Piacquadio from Pexels
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THIS ARTICLE HAS BEEN UPDATED

Adrian Chiles, the face and words behind a multitude of broadcast shows and column inches, has won a £1.7m IR35 tax appeal alongside his media company Basic Broadcasting Ltd (“BBL”). After two tribunal hearings, Judge Cannan has ruled in Chiles’ favour, allowing the appeal relating to services provided to the BBC and ITV between the five tax years spanning 2012 to 2017.

The tribunal’s partial analysis found that all the contracts created the initial impression of contracts of employment.  However, after crucially considering all the circumstances and activities as a whole, they agreed that Chiles was in business on his account. The evidence submitted to support that position was overwhelming, according to IR35 experts, and in the end, IR35 did not apply.

Here are some key takeaways from the latest judgment that helped Chiles prove status:

  • Hiring his own personal assistant.
  • Paying an agency 15% of his fees to manage and develop his career.
  • He carried out unpaid activities to maintain and grow his profile whilst turning down a variety of work.
  • He helped create a show and was entitled to a 50% share of production profits together with Avalon.
  • He developed and pitched his own ideas and contributed to other television programmes.
  • He presented other programmes for multiple production companies.
  • He wrote for several national newspapers.
  • He had provided his services as a broadcaster and journalist to so many others – in the period 1996 to 2019 he contracted with nearly 100 different third parties.
  • He was able to benefit from sound business management.

Source: IR35 Shield

Dave Chaplin, CEO of tax compliance firm IR35 Shield, who attended the tribunal and who has spoken to Chiles, said: “Mr Chiles has been subjected to seven years of hell which no-one should ever have to endure.”

The judgment unequivocally demonstrates that HMRC was entirely wrong in its assessment and failed to consider all the circumstances. He is the victim of a very poorly run investigation by HMRC inspectors.  Questions need to be asked as to whether additional independent oversight is needed when HMRC are running IR35 status cases.

Dave Chaplin, CEO of IR35 Shield

Chaplin continued: “It was also notable that the tribunal described all the witnesses as credible, and that ‘there is no suggestion that Mr Chiles set out to avoid tax by supplying his services through BBL.’

“The detailed decision documented the plethora of evidence that fully supported their conclusions, and it appears there are no credible avenues for HMRC to appeal.  They have put Mr Chiles through the wringer, both mentally and financially, due to the massive costs of having to defend himself twice, despite always paying his taxes correctly and the Judge confirming that Chiles never set out to avoid tax at all.

“He won fair and square, and HMRC should now leave him alone to recover from the ordeal he’s been needlessly put through.”

Chiles’ choice to provide his service to multiple clients is what helped his case of being truly self-employed and was key to the preparation for his defence presented to the tribunal.

A call for independent oversight in IR35 appeal cases with HMRC

According to a report on the case by Rebecca Seeley of Re Legal Consulting, in November 2021, BBL applied for disclosure of material in relation to IR35 decisions concerning television and radio presenters currently on appeal to the Upper Tribunal and the Court of Appeal, but HMRC refused.

“That stance was surprising because both Kickabout Productions vs HMRC (concerning radio presenter Paul Hawksbee) and HMRC v. Atholl House (concerning TV presenter Kaye Adams) were appealed and were being heard in the Court of Appeal in the last two weeks,” wrote Seeley at the time of the report (15/02/2022).

Chaplin said that it is worth noting that HMRC was fully aware of the key full range of actions that Chiles carried out, such as working for multiple clients.

“Chiles having submitted them on multiple occasions in the five years leading up to the first tribunal hearing. The question is why all this compelling evidence that demonstrated his innocence was seemingly ignored,” said Chaplin.

“The only next step HMRC needs to take is to apologise profusely for wrongly pursuing an innocent man,” he concluded.

Will HMRC appeal the Adrian Chiles case?

IR35 insurance provider and status specialist, Qdos, also responded to the news over the Chiles case and highlighted that HMRC can appeal the latest verdict. Seeley is of the same mindset that HMRC will attempt to appeal the case.

“This has been a long, drawn-out and no doubt stressful experience for Mr Chiles, who has faced the prospect of a £1.7m tax bill for years. To make matters worse, the BBC insisted that he stop working as an employee and start providing his services as a contractor. On the face of it, this looks to be a situation that he had little control over,” said Qdos CEO, Seb Maley.

“While HMRC pursuing high profile individuals for vast sums of tax will always concern other freelancers and contractors, it’s important to make clear that Mr Chiles’ working relationship was very different to, say, an IT contractor or freelance marketeer. In our experience, the majority of contractors are able to show they are genuinely self-employed with relative ease.

“Businesses impacted by IR35 reform can learn a lot from this case too. First, contractors can be safely engaged outside IR35 and there is no need to ban them in response to IR35 reform. Secondly, forcing individuals to operate under a particular working arrangement purely for the benefit of the company is short-sighted and could come back to haunt them,” said Maley.

Chaplin believes that HMRC will be hard pushed to appeal on many levels, as he explained via a LinkedIn post in response to this article:

“HMRC can apply to appeal, but they could be refused by the FTT – very likely. Then they have to try and appeal the refusal at UT – again, high bar to overcome. And, to get the chance to appeal they need to go for an Edwards v Bairstow challenge (not a chance IMHO) or have a point of law (can’t see one if Atholl wins one of its specific Grounds – I was at the CoA on this.) And then, if it gets to the UT (slim chance as I say) it then has to win that – which I don’t think they would. So, overall, I reckon this is solid.”

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