Kaye Adams defeat of HMRC should set IR35 precedent

In a significant victory for freelancers across the UK, media presenter Kaye Adams has won her IR35 case against HM Revenue and Customs (HMRC) after a gruelling nine-year legal battle. The First-tier Tribunal upheld Adams’s appeal for the third time, confirming her self-employed status for the tax years 2013/14 to 2016/17.

This landmark decision is expected to have far-reaching implications for other IR35 cases involving freelance workers in the media industry.

The Case: A nine-year ordeal

The case centred around the question of whether Adams was a deemed employee of the BBC during the relevant tax years. HMRC had argued that she should be classified as an employee and therefore liable to pay more taxes.

However, the tribunal consistently found that Adams was genuinely self-employed.

The tribunal noted that HMRC had sought to stop evidence from being heard and had attempted to adjourn the hearing. In addition, HMRC solicitors tried to withhold costs payable to Ms Adams.

A significant defeat for HMRC

The decision is a significant defeat for HMRC, who have been criticised for their aggressive pursuit of Adams.

“Kaye Adams is not a tax avoider; she is a victim of HMRC’s intransigence and has been used as a pawn in HMRC’s policy game to try and force media freelancers onto payroll,” said Dave Chaplin, CEO of IR35 tax advisory firm IR35 Shield.

It is estimated that HMRC has spent around £250,000 on the case, despite the fact that the amount of tax at stake is only £70,000.

The outcome of this case is a significant victory for freelancers across the UK. It shows that HMRC cannot simply ignore the employment status of freelancers and must apply the IR35 rules correctly.

“If IR35 is deemed too problematic to apply, it is surely time for HMRC to work with our legislators to address the flaws rather than picking off decent, hard-working, law-abiding people one by one in the hope that others will buckle under the pressure,” said  Adams.

A time for change

This case underscores the need for HMRC to apply the IR35 rules fairly and consistently.

It also highlights the importance of providing freelancers with the legal protection they need to continue contributing to the UK’s vibrant and diverse economy. As the dust settles on this nine-year ordeal, the hope is that this case will serve as a catalyst for much-needed change in the way HMRC handles IR35 cases.

However, it is believed HMRC might not be done with the case just yet. According to reports, a spokesperson for HMRC said: “It is our duty to ensure everyone pays the right tax under the law, regardless of wealth or status. We are disappointed in the tribunal’s decision and will consider the judgment before deciding next steps.”

HMRC has 56 days to submit permission to appeal or to accept the tribunal’s decision.

At the time of writing, there are currently four additional IR35 cases that HMRC lost at the First-tier tax tribunal, which are lined up to be heard at the Upper-tier, which involve portfolio workers.