IR35 case law compendium: famous faces who lost to HMRC

It’s all very well knowing that outside IR35 is the status you ultimately want to achieve as a tech contractor or IT job board worker working temporarily.

But it’s even better if you can cite actual IR35 cases, even working practices in IR35 cases, to show a prospective client, or a recruitment agency, just how seriously you take IR35 and off-payroll compliance, writes Charlie Hemsworth of status specialists Bauer & Cottrell.

How tech job board users can double as IR35 case law experts

As promised in my outside IR35 overview, I want to bring Free-Work readers three cases that hold key lessons that IT job board users can learn, and ideally commit to memory to come across as a real IR35 case law expert!

Before I pinpoint this IR35 case trio, there’s an IR35 case right now -- Bryan Robson v HMRC, that is worth citing if you want to appear extremely up-to-date.

IR35: Robson versus HMRC, a warning

But beware -- the Robson IR35 case is highly unique, because:

• it deals with “image rights” (probably not a consideration for most tech contractors and IT job board users) and;

• it has the foible that the first four years of HMRC’s assessment were thrown out, because Robson signed his contract and carried out the work in a personal capacity, not via an ‘intermediary’ (his limited company) and therefore the ‘Intermediaries legislation’ could not apply to those years.

Read my full analysis if you want the lowdown on the Robson case.

Three IR35 cases revealing what NOT do on IR35

However here, I want to focus on other cases that went in HMRC’s favour, but which have wider application for the taxpaying-contractor.

Please note, as HMRC won these three IR35 cases, they are all examples of WHAT NOT TO DO as an IT contractor or tech job board user working temporarily, as each was determined by a court to be INSIDE IR35.

Famous faces or your face, it makes no difference to HMRC

Another note. These cases don’t involve IT or tech contractors. On the contrary, like Robson, they are all high-profile individuals.

But parallels can still be drawn as the IR35 status tests apply in different contexts across all industries.

And ‘fame’ is no protection from HMRC’s most divisive rule!

1. Paul Hawksbee (Kickabout Productions Ltd) and Talksport - 2022

Broadcaster Paul Hawksbee’s 18-year stint with Talksport shows the pitfalls of long-term exclusive relationships.

Despite some creative freedom, Talksport’s control over Hawksbee’s time and the lack of substitution rights painted a picture of dependency.

The ruling emphasised that long-term exclusivity undermines the independence central to outside IR35 status.

Lesson of Paul Hawksbee IR35 case?

Avoid dependency on a single client over an extended period.

Limited company IT contractors should prioritise varied client engagements.

And try to ensure contracts contain project-specific deliverables rather than ongoing obligations.

2. Eamonn Holmes (Red White And Green Ltd) and ITV (2023)

Presenter Eamonn Holmes’ 15-year-long presenting relationship with ITV had just about everything wrong with it possible -- in my view as an IR35 expert.

ITV had significant control over his work.

Holmes had no right to substitute.

And there was Mutuality of Obligation (including payment), even when shows were cancelled.

Need more inside IR35 indicators? Well, Holmes also enjoyed employee-style benefits, including a company car and clothing allowances!

Lesson of Eamonn Holmes IR35 case?

Avoid all the above.

If your working practices resemble Holmes’s working practices, you have little hope, and are better off declaring an “inside IR35” position.

3. Stuart Barnes (S&L Barnes Ltd) and Sky – 2024

Rugby commentator Stuart Barnes initially succeeded in proving his outside IR35 status during his work on behalf of Sky TV Limited, but a later hearing overturned the decision.

The issue was he had a contract that didn’t align with his working practices.

Sky retained significant contractual control over his work schedule and had first call on his services.

This ‘first dibs’ and contractual rights of control for Sky ended up outweighing the outside IR35 factors, such as Barnes’s multiple client base and reputation as an expert.

Lesson of Stuart Barnes IR35 case?

A well-drafted contract that matches day-to-day practices is absolutely key.

Contractors and job board users working temporarily in tech and other sectors should ensure their agreements reflect autonomy and independence, avoiding provisions that grant the client too much control.

Now you know (inside) IR35 case law, what outside IR35 steps will you take?

Being outside IR35 offers great benefits, but it comes with responsibilities.

Recent cases reveal clear patterns which contract job board users would do well to memorise and avoid.

Working practices must demonstrate an outside IR35 position and written contracts must sing the same tune.

With HMRC increasing compliance activity and winning more court cases, now’s NOT the time to bury your head in the sand.

On the contrary, take action and ensure you stay on the right side of IR35.

Finally, what steps must contractors take to cement outside IR35 status?

For most contractors, ‘taking action’ means staying up to date with case law, investing in professional advice, and getting your contracts and working practices right. It might even include helping your clients to understand the importance and benefits of a proper business-to-business relationship.

For further and dependable advice, tailored to your circumstances, consult an IR35 and off-payroll working specialist.