[UK] £1.7m tax bill for top presenter after HMRC appeal loss

[UK] £1.7m tax bill for top presenter after HMRC appeal loss
11 Jun 2024

In the UK, BBC and ITV television presenter Adrian Chiles faces a £1.7m bill after losing an appeal with HMRC over his tax status, MSN reports

Mr Chiles has now been in a 10-year legal battle with HMRC over whether he should have been classed as an employee or freelancer during his time at the broadcasters.

He won his case in February 2022 but HMRC appealed the decision to the Upper-Tier Tribunal. On June 7, it reportedly ruled that “errors of law” had informed the judgement. The case will now return to the First-Tier tribunal. 

HMRC contends Mr Chiles was not a freelancer when working for the BBC and ITV between 2012 and 2017 and should have paid tax as an “employee”, despite working as a contractor through his own limited company Basic Broadcasting Ltd (BBL) since 1996. 

If he loses, he will owe £1.2m in income taxes and almost £500,000 in National Insurance Contributions (NICs). 

The ruling came during a wider HMRC crackdown on taxpayers who are “disguised employees”; argued by HMRC to be reducing their tax bills by channeling their income through personal service companies.

Susan Ball - from accounting firm RSM - reportedly told The Telegraph that the IR35 employment tax rules at the centre of the case were “complex” and often “catch people out”.

Ms Ball said, “The key question is whether the relationship is one that looks like an employment relationship, and if so then tax must be deducted under these rules.

“But you’re asking individuals to do this sort of thing themselves and getting it right when judges aren’t sure themselves.

“In Mr Chiles’ case, it’s been 10 years of going through several layers of the court system. But we still don’t have a definitive answer on whether tax is due or not.”

HMRC has been criticised for its treatment of taxpayers found breaching its complicated rules.

Dave Chaplin - from tax advisory firm IR35 Shield - told The Telegraph that taxpayers were at a “severe disadvantage” in legal disputes with HMRC. 

Mr Chaplin said, “The power imbalance between taxpayers and HMRC in these cases is staggering.

“While Mr Chiles must bear the financial and emotional burden of this prolonged dispute, HMRC has the luxury of dipping into the public purse to fund their legal battles.

“It’s like playing a game of poker where your opponent has an unlimited supply of chips and can go all-in on every hand.

“Taxpayers are at a severe disadvantage when taking on HMRC in these cases, and the system desperately needs reform. Cases like Mr. Chiles’ serve as a stark reminder of the human cost of this broken system.”

An HMRC spokesperson said, “We appreciate there’s a real person behind every case and are committed to treating all taxpayers with respect. We always seek to resolve disputes out of court and only take action to litigate where this isn’t possible.

“We carefully consider various factors when deciding whether to appeal litigation cases, including the tax we think is due under the law, whether clarification of that law would be helpful and whether we can achieve that clarification in other ways.”


Source: MSN (via The Telegraph)

(Link and quotes via orignal reporting)

In the UK, BBC and ITV television presenter Adrian Chiles faces a £1.7m bill after losing an appeal with HMRC over his tax status, MSN reports

Mr Chiles has now been in a 10-year legal battle with HMRC over whether he should have been classed as an employee or freelancer during his time at the broadcasters.

He won his case in February 2022 but HMRC appealed the decision to the Upper-Tier Tribunal. On June 7, it reportedly ruled that “errors of law” had informed the judgement. The case will now return to the First-Tier tribunal. 

HMRC contends Mr Chiles was not a freelancer when working for the BBC and ITV between 2012 and 2017 and should have paid tax as an “employee”, despite working as a contractor through his own limited company Basic Broadcasting Ltd (BBL) since 1996. 

If he loses, he will owe £1.2m in income taxes and almost £500,000 in National Insurance Contributions (NICs). 

The ruling came during a wider HMRC crackdown on taxpayers who are “disguised employees”; argued by HMRC to be reducing their tax bills by channeling their income through personal service companies.

Susan Ball - from accounting firm RSM - reportedly told The Telegraph that the IR35 employment tax rules at the centre of the case were “complex” and often “catch people out”.

Ms Ball said, “The key question is whether the relationship is one that looks like an employment relationship, and if so then tax must be deducted under these rules.

“But you’re asking individuals to do this sort of thing themselves and getting it right when judges aren’t sure themselves.

“In Mr Chiles’ case, it’s been 10 years of going through several layers of the court system. But we still don’t have a definitive answer on whether tax is due or not.”

HMRC has been criticised for its treatment of taxpayers found breaching its complicated rules.

Dave Chaplin - from tax advisory firm IR35 Shield - told The Telegraph that taxpayers were at a “severe disadvantage” in legal disputes with HMRC. 

Mr Chaplin said, “The power imbalance between taxpayers and HMRC in these cases is staggering.

“While Mr Chiles must bear the financial and emotional burden of this prolonged dispute, HMRC has the luxury of dipping into the public purse to fund their legal battles.

“It’s like playing a game of poker where your opponent has an unlimited supply of chips and can go all-in on every hand.

“Taxpayers are at a severe disadvantage when taking on HMRC in these cases, and the system desperately needs reform. Cases like Mr. Chiles’ serve as a stark reminder of the human cost of this broken system.”

An HMRC spokesperson said, “We appreciate there’s a real person behind every case and are committed to treating all taxpayers with respect. We always seek to resolve disputes out of court and only take action to litigate where this isn’t possible.

“We carefully consider various factors when deciding whether to appeal litigation cases, including the tax we think is due under the law, whether clarification of that law would be helpful and whether we can achieve that clarification in other ways.”


Source: MSN (via The Telegraph)

(Link and quotes via orignal reporting)

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