Broadcaster Adrian Chiles’ IR35 battle with HMRC over a £1.7 million tax bill rumbles on into a decade, and is now set to return to the First-tier Tribunal (FTT) after HMRC’s successful appeal to the Upper Tribunal (UT).
Brief history of the case
Chiles’ IR35 troubles began in 2012, when HMRC initiated an investigation into his engagements through his company, Basic Broadcasting Ltd (BBL). HMRC argued that IR35 applied to his work with the BBC and ITV between 2012 to 2017.
Chiles won at the FTT in 2022, where it was found there was no intent to avoid tax and with Chiles’ status as being in business on his own account a significant factor in the case.
Although it was found that mutuality of obligation and sufficient frameworks of control existed within both contracts, the tribunal found that Chiles’ independence, including managing his career, hiring a personal assistant, and engaging in various other commercial activities demonstrated that these engagements were part of his broader business activities. Chiles’ was found to be “part and parcel” of his own business and subsequently outside IR35.
HMRC grounds of appeal
HMRC appealed the FTT decision, leading to a hearing at the Upper Tribunal in February 2024. HMRC’s primary ground of appeal was that the FTT had made legal errors in applying the third stage of the Ready Mixed Concrete (RMC) test. Specifically, that the FTT focused too heavily on whether Chiles was in business on his own account, without adequately considering the overall terms of the hypothetical contracts with the BBC and ITV.
The UT also allowed HMRC to raise new arguments regarding whether the BBC and ITV were aware of the relevant circumstances of Chiles’ broader business activities, a point not fully explored by the FTT.
The UT ultimately agreed with HMRC that the FTT erred in law in applying the third stage of the RMC test, and decided to remit the case back to FTT for a fourth hearing. This follows a similar path to the cases of Atholl House and Ralc Consulting.
IR35 reforms needed: Chiles’ case highlights ongoing challenges
This case adds to the growing number of those remitted back to the FTT, highlighting the ongoing complexity and difficulty in establishing IR35/employment status. With courts found to be making errors, it raises major concerns about the challenges everyone else faces.
With the date for the fourth hearing to be confirmed, the outcome could have repercussions on the weight applied to being “in business on your own account,” a factor that has played a major role in various recent cases. Additionally, we are still awaiting the outcome of the PGMOL case which will provide clarity on the test of mutuality of obligation.
Chiles’ ongoing case, as with many others, demonstrates that those under investigation should be prepared for lengthy disputes with HMRC. These cases are not only extremely expensive for taxpayers but also cause tremendous stress for the individuals involved, as acknowledged by the UT in Chiles’ case.
