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Growler, a pint-sized Scottish, wins court appeal for over £ 1.2m tax bill
British television presenter Lorraine Lorraine breakfast Editorial credit: Twocoms / Shutterstock.com
Lorraine Kelly, an obsequious TV host for breakfast, was an unlikely champion of British freelancers fighting the IR35 law after a court ruled she should not pay a $ 1.2 million tax bill because she was not an employee of ITV.
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Its finance and customs department (HMRC) has reformed the way in which the tax status of out-of-service staff is defined in the public sector from April 2017: when the IR35 transferred responsibility for this determination from employee to employer. Any entrepreneur involved in this change is taxed as an employee instead of being liable to corporation tax via his personal services company (PSC).
Perma-smiling, Kelly herself awarded in 2016 the tax bill for work at ITV Breakfast for the previous four years because HMRC had concluded to the existence of a direct contract between her and the chain of TV. She sent him an income tax bill of £ 899,912.95 and asked for more than £ 300,000 in national insurance contributions.
The appeal was heard before the Tax Court of the Court of First Instance in Birmingham in November, but the decision was made late yesterday.
Kelly, who is currently leading the morning program Dawnand who has signed a contract with ITV via a company that she heads with her husband, has been described in the proceedings as a "star of the self-employed".
Scottish is not entitled to benefits such as vacation, pension, sick leave or maternity leave and has no job security. And she frequently did work, including an expedition for a magazine in Antartica, for rival television and radio stations and other media.
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Judge Jennifer Dean agreed that the agreement between Kelly and ITV was "a service contract", adding:
"Although the employment contract is not subject to the obligation to include such features, we believe that their absence indicates that Ms. Kelly was not considered or treated as an employee."
"By examining the situation as a whole and conducting a thoughtful and qualitative badessment of the evidence as a whole, we came to the conclusion that the relationship between Ms. Kelly and ITV was a service contract," added the judge.
HMRC, which wants to extend the IR35 legislation to the private sector, said it was "disappointed that the court of first instance ruled that the rules on intermediaries (also called IR35) did not apply in the first place. ;species".
"We will carefully consider the outcome of the court before deciding whether to appeal or not," said a spokesman.
A second consultation on the implementation of IR 35 in the private sector took place last month. In this document, HMRC has promised to continue working on the CEST tool used to check the employment status of a person, which has been criticized for its inability.
Seb Maley, CEO of Qdos Contractor, a provider of tax insurance, said that Kelly was the last of a long list of people to hire, accused by HRCM of "unfairly pursuing genuine freelancers and entrepreneurs."
"This is a particularly high-profile case that gives the HMRC very little clarity, which clearly has a hard time interpreting the very legislation that it has created, trying to enforce and insist on reform."
Judge Dean criticized the HMRC's CST by stating, "In our opinion, the level of control is well below the level sufficient to demonstrate a service contract and we are satisfied that the factors clearly indicate that it is safe." was acting on a service contract. "
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Dave Caplin, CEO of ContractorCalculator, said that "on many occasions, we have refuted HMRC's badertion that CEST is accurate and we have once again proved that it was the case" .
He again pointed out that HMRC had made statements about the accuracy of the tool "without providing any formal proof of the test … this decision clearly indicates the opposite".
"HMRC has also been touted previously that payroll reforms had yielded £ 550 million, nearly double the amount predicted by the Office of Budget Responsibility." "Damage and disrupt businesses by mistakenly taxing them." to be proud and certainly not a sign of compliance, "added Caplin.
Kelly's case is the fourth of five IR35 cases that HMRC has "lost" since 2018, but the plan remains to broaden the scope of the IR35's application to the private sector. "This ruling should remind the government that it can not expect companies to understand a tax law that it can not even enforce itself." ®
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