IR35 “Show” Cases: Where are we now?

1st June 2023
Although it has been with us since 1999, IR35 tax rules will probably be unfamiliar to most readers. These anti avoidance rules were introduced to stop workers reducing their taxes by structuring their affairs to get paid via their own personal service company.

Where ‘caught’ by IR35, such arrangements would then collect the same amount of tax as if the worker were PAYE employed directly by the end client. These rules, which require a binary decision of whether ‘caught’ or ‘not caught’ by IR35, have always been a bit ‘subjective’, and have probably never collected the amount of tax intended, as tax payable if ‘not caught’ can be reduced by:


  • Being paid in dividends rather than salary
  • Income shifting to spouse
  • Avoiding income tax by retaining profits in company
  • Claiming tax relief on a wider range of expenses
  • Extracting profits by liquidating the company


HMRC therefore sought to beef up IR35 rules by introducing off-payroll working rules, to shift the caught/not caught decision to the end client, and they also produced a ‘Check Employment Status Indicator’ online tool, to determine the decision. In their latest initiative on this front, HMRC seem to be now be targeting (and taking to Court) high profile individuals who they deem as not correctly following these rules, presumably with the knowledge that such newsworthy ‘scare’ stories will result in higher levels of compliance from the rest of the contractor/freelancer world. So what further have we learnt from these show cases:


  • Gary Lineker (£4.9m Tax)             Won Case          Contracted as principal rather than through partnership
  • Eamonn Holmes  (£0.25m Tax)   Lost Case          Sufficient framework of control existed from ITV
  • Lorraine Kelly (£1.2m Tax)            Won Case          Level of control by ITV not sufficient
  • Stuart Barnes  (£0.695m Tax)      Won Case          40% of income from other sources
  • Adrian Chiles  (£1.7m Tax)             Won Case         Sharing in 50% of production profits


I don’t think we can learn much new technically from these cases, but we can see that ambiguity continues and HMRC does seem to now have a greater appetite to police higher IR35 compliance. Introduction of off-payroll working rules has resulted in more end clients taking on employee staff, rather than contractors, so has had the desired effect of collecting more PAYE tax. And HMRC have just announced that they are appealing the Gary Lineker ruling.

Disclaimer - All information in this post was correct at time of writing.
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