Empowering the Freelance Economy

The Paul Hawksbee case: Exclusivity doesn’t pay off

Photo Source: Talksport
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Paul Hawksbee, one half of Talksport’s Hawksbee & Jacobs, the hilarious afternoon sports show, will not be laughing over the HMRC’s successful overturn of an IR35 case at Upper Tribunal involving the sports presenter.

The latest win for HMRC came down to Hawksbee being so good at his work, which included writing his own jokes, that his client, Talksport, wanted exclusivity. The privilege of being in such demand will now cost Mr Hawksbee a reported £140,000 in what HMRC deem as tax liabilities.

Just over a year ago, the case (TC07230) was put in Hawksbee’s favour on what was considered a clerical error- meaning the contract with Talksport in the tax years 2012/13 to 2014/15, which represented around 90% of Hawksee’s income was involving Hawksbee, the individual, and not his company, Kickabout Productions, in that period. Hawksbee was contracted to present at least 222 shows per year, at £575 per programme plus expenses, but he was only paid for the shows he presented. clients want exclusivity.

Like so many solopreneurs or self-employed individuals in the creative industries, Hawksbee was advised by his accountant to set up his own company, a limited company. This is to ensure tax efficiency that is measured up next to the additional expenses as a business owner, including accounting and insurance costs, such as professional indemnity cover.

Seb Maley, Qdos CEO, believes this is a “rare win for HMRC”, but one that shines a light on the needless complexity of the IR35 legislation, which can easily be misinterpreted and misapplied, according to the IR35 tax insyrance specialist.

“It also shows the significant sums that are very often at stake in these tax cases, with Mr Hawksbee now expected to repay a reported £140,000 to HMRC. It’s why, for this very reason, contractors choose to protect themselves with IR35 insurance. It’s also why many private sector companies, that will carry the risk next year, are encouraged to do the same.”

The fact that this case was by no means clear cut also goes to show how important it is that IR35 status is set with care and after careful consideration of the written contract and a review of the working practices, according to Maley.

“Contractors, along with hiring organisations and recruitment agencies, need to be acutely aware of this when deciding if the service provided reflects self-employment or employment,” he suggests.

“As concerning as this result is, it’s worth pointing out that Mr Hawksbee’s engagement – like many other presenters who have faced an IR35 investigation – is quite different from a typical contractor’s. In our experience, the vast majority of contractors are genuine and belong outside IR35,” says Maley

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