TV presenter Eamonn Holmes loses IR35 appeal

Veteran TV presenter Eamonn Holmes has lost a First Tier Tribunal (FTT) appeal regarding his status as a freelancer under IR35 rules, with the judge determining his contract with ITV’s This Morning programme amounted to employment

The case concerned Holmes’ personal services company (PSC) called Red, White and Green Ltd (RWG), which was set up in 2001. From around 2006, Holmes, 60, started presenting on This Morning, doing so for a period of about 15 years.

The tribunal heard details of four contracts between the broadcaster and RWG during that period. The FTT was also told that during gaps between the contracting periods, Holmes worked on the programme via a different PSC, Holmes and Away Ltd.

Under the terms of the contract, RWG was required to procure Holmes’ services ‘on an exclusive basis’ during the specified period or on dates agreed with the executive producer. The specified dates included a list of Fridays, with exceptions in July and August, and Monday to Thursday dates in other weeks.

However, unlike ITV employees, Holmes did not have any of the employee benefits argued Holmes’ lawyer, Robert Maas.

Judge Harriet Morgan rejected this, stating: ‘I cannot see that, under the principles set out in case law, the provision of any additional enhanced benefits, in excess of the statutory minimum, is an integral part of an employment relationship.

‘In my view, the fact that a putative employer has chosen not to provide such benefits does not of itself indicate that a relationship is not one of employment where the other substantive legal rights and obligations of the parties evidence the contrary.’

The contract required Holmes to be ‘as flexible as possible’ regarding any changes to the dates and also stated that when ITV cancelled any dates and could not reschedule for reasons other than Holmes’ unavailability then RWG was entitled to payment in full for cancelled dates.

As well as a fixed fee for each programme, the contract gave Holmes additional benefits including the provision of a car for travel to the studio, a clothing allowance of around £5,000 and expenses for travel and accommodation for certain trips.

Holmes, who has worked in journalism for four decades, described himself to the tribunal as a freelance journalist and broadcaster and as a ‘gun for hire on my terms’, with engagers signing up for his ‘USP and profile’ .He said his work with Sky News between 2011 and 2015 occupied more of his time than his This Morning duties, and that he carried out a large number of other engagements on a self-employed basis.

However, the tribunal heard that for the tax years 2011/12 and 2012/13, RWG’s main income stream was from the work for This Morning.  Holmes told the tribunal that he had a specialist role as the ‘anchor man’ and had been hired by ITV as a maverick who could hold an audience because of his specific expertise. As such, he was ‘effectively in total control of what needs to happen’ when on air.

In its accounts for the periods ending on 30 April 2013, 30 Aril 2014 and 30 April 2015, RWG is shown as having turnover from business activities of £267,862, £634,762 and £1,025,348 respectively.

The FTT heard evidence from the presenter that he did his own research, wrote and asked questions he developed and was only following a prepared script ‘10% of the time’.  Holmes also said that when he had a double hip replacement in 2016, ITV did not pay him any sick leave and he did not get any holiday leave.

IR35 assessment

The tribunal heard a number of arguments about the level of control ITV exerted over Holmes’ work.  The judge concluded that whether Holmes was employed by RWG was not relevant to the analysis of whether ITV controlled Holmes under the assumed contracts. It then went on to consider mutuality of obligation between the company and the broadcaster and the issue of substitution of services.

Holmes’ representatives argued that he carried out many of his activities under his own name and was taxed as a person carrying on a profession.

Individual engagements should be looked at in the context of his business activities as a whole, and ‘what at first sight might appear to be employment may simply be an incident of the worker’s overall professional activities.’

Similarly, it was wrong to view ITV as being able to control Holmes such as to be ‘his master’, as the situation was analogous to a chef hired to cook a meal.  While ITV provided ingredients, it was Holmes alone who supplied the final result.

Holmes’ lawyer also argued that RWG was paid fees, rather than a salary, and there was no provision regarding pension, holidays, sick pay or training.

For its part, HMRC said RWG’s contract painted a picture of ‘regular, predictable and substantial part-time employment.’ and argued that ITV had demonstrated the right to control, as it determined whether the programme went out and ensured it met with all regulatory guidelines. In that sense it was not correct, as Holmes asserted, that the presenter was ‘answerable to no one but myself’.

In addition, Holmes was required to seek ITV’s permission to undertake certain other commercial activities and RWG took on no risk in the contracts, which were renewed.

Sufficient mutuality

The FTT judge found there was sufficient mutuality and a framework of control to place the contract between ITV and RWG in the employment field. ITV was required to provide work on specified dates for a fixed fee, and Holmes was required to work on those dates for the fee.

In terms of control, ITV had full control of editorial content, was able to restrict Holmes’ other commercial activities, could require him not to appear on the programme in branded clothing and even if at times, as he claimed, Holmes ‘did his own thing’, the contract contained the expectation of control.

The judge said the fact that ITV lack the ability in the immediate sense to control Holmes’ action during a live broadcast did not mean that assumed relationship could not be categorised as an employment contract.  The absence of assumed benefits was also not a material reason to rule out an employment contract.

The FTT concluded that there was sufficient mutuality and at least a sufficient framework of control to place the assumed relationship between ITV and Holmes in the employment field.

It stated: ‘On that basis and, having regard to all other relevant factors, my view is that overall, throughout all relevant tax years, the assumed relationship between ITV and Mr Holmes was one of an employment rather than self-employment.’

HMRC reaction

An HMRC spokesperson said: ‘HMRC welcomes the judgement, which confirms that we took the right approach.

‘The tax rules require that employment taxes are paid even where a person works through their own company. HMRC ensures that tax is paid in accordance with those rules.’

Of the eight presenters to have challenged HMRC so far at tribunal, five have lost and HMRC is appealing two of the other cases. Albatel Ltd, the PSC of Lorraine Kelly is the only presenter case HMRC has lost and has not appealed. The most recent ruling went in favour of Helen Fospero.

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