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Talksport radio presenter, Paul Hawksbee, has lost his £140,000 IR35 case at the Court of Appeal – a verdict that demonstrates the potential cost of IR35 investigations and resulting liabilities.
Hawksbee, who is well known for hosting the ‘Hawksbee and Jacobs’ show alongside Andy Jacobs, failed to convince the Court of Appeal that a 2019 Upper Tribunal (UT) decision was incorrect and in turn, that he was a genuine contractor.
This case focused on contracts the host held between his limited company, Kickabout Productions Ltd (KPL) and Talksport Limited (Talksport) between 2012 and 2015.
The tax liability at stake – which the veteran presenter will now be expected to pay to HMRC – amounted to £89,758 in Income Tax and £53,368 in National Insurance Contributions.
When appealing the case, Hawksbee did so upon a number of grounds, which we’ll focus on now.
The presenter took the view that the UT “erred in its interpretation of the contracts as regards the obligation of Talksport to provide work.”
This relates to Mutuality of Obligation (MoO), which is whether or not a mutual obligation exists for the client to provide work and the contractor to accept it. The presence of MoO is common in engagements that fall inside IR35.
However, this appeal was dismissed by Judge Sir David Richards, given that Hawksbee was expected to provide his presenting services via KPL for a three hour radio show on an exclusive basis for at least 222 days a year, across two years.
In his appeal, Hawksbee also called for a ‘remake’ of the UT decision in 2019 based on the grounds that the First Tier Tribunal (FTT) had made an error in stating that KPL wasn’t under any obligation to provide its services to Talksport – a key aspect of this case, which the UT roundly rejected.
This was also thrown out by Judge Richards, who said “there is little or nothing in ground two of KPL's grounds of appeal and I would reject it.”
Control was also an important factor in this long-running IR35 case. Hawksbee said that Talksport had little control over the working relationship. He referred to the way the FTT interpreted this crucial aspect of IR35 status, which “gave little weight” to the fact that Talksport controlled where and when he provided his services.
However, not only was it deemed important in the UT, but the Court of Appeal also agreed. In Judge Richards’ opinion, this was “no more than an attempt (from Hawksbee) to re-argue the issue.”
Other aspects of Hawskbee’s appeal focused on the UT taking into account irrelevant factors and disregarding relevant factors, upon which IR35 status can hinge.
From the length of time he had been working with Talksport (18 years) to the absence of holiday and sick pay clauses in the contracts and not being deemed as ‘part and parcel’ of the client organisation, the radio host challenged the UT’s decision-making.
While it was agreed that all factors must be taken into account when determining IR35 status, none of these were accepted by Judge Richards who said: “factors which are relevant, even highly relevant, in some cases may well be of little or no relevance in other cases.”
To conclude, while a high profile HMRC victory will always concern contractors – who can still be investigated for contracts completed prior to the introduction of IR35 reform – victory for the tax office shouldn’t scare contractors or the businesses that engage them.
In fact, and as our CEO, Seb Maley, explained to FT Adviser, “if anything, it services a firm reminder about the importance of compliance.”
With over 19 years of experience with IR35, Seb has focused on sharing information with an industry of flexible workers and the businesses that engage them. Connect with Seb on LinkedIn to stay up to date with news updates and his insights.
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