Adrian Chiles’ £1.7m IR35 HMRC Tax Dispute

Broadcaster Adrian Chiles continues to navigate a protracted legal dispute with HM Revenue and Customs (HMRC) concerning alleged tax liabilities amounting to £1.7 million. The case revolves around Chiles’ work for both the BBC and ITV through his personal company, Basic Broadcasting Limited.

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Adrian Chiles, HMRC and IR35 Tax Rules

Adrian Chiles commenced his tenure at the BBC in 1992. Around 1996, he transitioned to providing his services through his company, Basic Broadcasting Limited (BBL), as per BBC’s requirement. By 2010, BBL facilitated Chiles’ contributions to various BBC programs, including The One Show and Match of the Day.

Subsequently, in June 2010, BBL’s association with the BBC concluded, and it proceeded to engage with ITV for Chiles’ services, maintaining this contractual arrangement until 2015. Additionally, in 2013, BBL extended its services to include Mr. Chiles’ contributions to BBC radio, a relationship that endured throughout the relevant period.

HMRC issued determinations under the IR35 legislation regarding two contracts with ITV and three contracts with the BBC, spanning the tax years from 2012-2013 to 2016-2017. These determinations were based on the assertion that Chiles was considered an employee under each individual contract with ITV and the BBC

Dispute stems from HMRC’s contention that payments made by ITV and BBC to Chiles’ personal service company, Basic Broadcasting Limited (BBL), should be subject to Income Tax and National Insurance Contributions (NICs). The tax authorities claim that BBL owes £1,249,433 in Income Tax and £460,739 in National Insurance Contributions for contracts spanning between 2012 and 2017.

HMRC argues that under IR35 tax rules, which target disguised employees using limited companies, Chiles should be treated as an employee of the broadcasters, thereby necessitating tax payments from BBL.

The prolonged legal battle has reportedly taken a toll on Chiles’ mental health, highlighting the personal ramifications of protracted litigation. Adrian Chiles’ ongoing tax dispute underscores the complexities of employment classification in the broadcasting industry and the significant legal and personal implications of such disputes.

What is HMRC’s IR35? (Off-payroll working rules)

HMRC’s IR35, off-payroll working rules, govern the tax status of self-employed individuals providing services through intermediaries such as limited companies. The classification is pivotal for tax considerations, distinguishing between self-employed workers and regular employees. HMRC claim that BBL owes £1,249,433 in Income Tax and £460,739 in National Insurance Contributions due on the money ITV and BBC paid to Chiles’ personal service company, BBL

Tax Tribunal: Basic Broadcasting Limited v HMRC

In February 2022, the First Tier Tribunal (FTT) ruled in favour of Chiles, in the case Basic Broadcasting Limited v HMRC [2022] TC08400, determining that he operated as a self-employed contractor rather than an employee under contractual agreements with BBC and ITV. The First-tier Tribunal (FTT) determined that although the significant broadcasting agreements with the BBC and ITV bore resemblances to employment contracts, they were integral components of Adrian Chiles’ broader career as a television presenter. Consequently, the application of the IR35 intermediaries legislation was deemed inapplicable, leading to a favourable outcome for the taxpayer upon appeal.

HMRC has appealed to the Upper Tribunal, alleging legal errors and advocating for Chiles’ classification as an employee based on the broadcasters’ purported control over his work.

Upper Tribunal IR35 Tax Appeal Hearing

The appeal hearing took place in London on Tuesday, 6 February 2024 before Mr Justice Meade and Upper Tribunal Judge Thomas Scott at the Upper-tier Tribunal (UT).  Lawyers for HMRC asserted that the First-tier Tribunal’s decision was flawed, emphasising the broadcasters’ control over Chiles’ work as indicative of an employer-employee relationship.

Chiles’ legal team defended the First-tier Tribunal’s ruling, arguing that BBL’s incorporation in 1996 was at the BBC’s insistence and that subsequent services were provided to numerous third parties. A ruling on the appeal is pending, with both parties awaiting the Tribunal’s decision.

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Our team of experienced tax lawyers specialises in navigating complex tax regulations and advocating for our clients’ interests in disputes with tax authorities. We possess in-depth knowledge of IR35 rules and employment tax laws, enabling us to provide strategic guidance tailored to each client’s unique situation.

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