When a contractor is an employee

A former BBC presenter caught by the IR35 tax rules has lost her employment status appeal against HRMC and been ordered to pay more than £400k in unpaid tax after the High Court found that she was an employee, not a contractor.

In the case the court ruled that the presenter must pay backdated income tax and national insurance contributions (NICs) amounting to £419,151 for tax years 2006-07 to 2012-13. The case could have financial implications for other contractors and freelancers caught in the IR35 net, as well as for the employers they work for – in terms of who they can employ and on what basis.

The judge in the case said that whether the BBC regarded the contractor as an employee was not relevant and found that she “was an employee under the hypothetical contract”.

The BBC ultimately restricted her from providing services to other organisations in the UK without its consent; she was also contractually obliged to perform services, and the BBC was contractually obliged to pay monthly fees to her.