In Basic Broadcasting Limited v HMRC, the First-Tier Tribunal (FTT) held that the IR35 rules did not apply to arrangements entered into by Mr Chiles’ personal service company, Basic Broadcasting Limited (BBL) with the BBC and ITV to supply his services as a presenter.

In coming to their decision, the FTT considered whether, if Mr Chiles had engaged with BBC/ITV directly, he would have been classed as an employee or self-employed. Their decision that he would have been self-employed, and therefore the IR35 rules do not apply, will no doubt come as a relief to Mr Chiles given that over £1.7m of income tax and NICs were at stake.

The first half – mutuality of obligation and control

The FTT’s decision did not go entirely Mr Chiles’ way however, as it was held that two key tests for employment – mutuality of obligation and control - were met.

On mutuality of obligation, although there were differences between the BBC and ITV contracts, the FTT found that both met the minimum requirement for there to be some obligation on Mr Chiles to work and some obligation on ITV/BBC to provide or pay for it.

The analysis on control was a little more complex. In essence, the FTT had to consider whether ITV and/or BBC had a sufficient framework within which they could control what was done by Mr Chiles, as well as where, when and how it was done.

An important factor in the FTT’s decision was that editorial control clearly lay with ITV/BBC. As in other cases involving skilled individuals, there was limited scope for the BBC/ITV to have ‘in the moment’ control over what Mr Chiles did. However, it was not necessary to have the power to micro manage in this way – what mattered was the level of editorial control, and it was significant that the broadcasters could require Mr Chiles to take account of reasonable comments and requests whilst presenting and that they had final editorial control.

Taken together, the FTT considered that these terms gave ITV and BBC a sufficient measure of control that, prima facie, he would have been an employee if directly contracted.

The second half – looking at the wider picture

Having gone 2-0 down to HMRC in the first half of the FTT’s decision, Mr Chiles was however saved in the final half by their conclusion that, when looking at the wider picture, he would not have been an employee. This conclusion trumped the issues of mutuality and control, and meant that the IR35 rules did not apply.

The reason for the FTT’s conclusion was that Mr Chiles was in business on his own account, and that the work he carried out for the BBC and ITV formed a part of that business.

The evidence for this included:

• Mr Chiles provided services as a broadcaster and journalist to a significant number of clients – nearly 100 in the period from 1996 to 2019.
• In addition, he explored work on other projects which did not come to fruition.
• He appointed an agent to help him build his career and reputation, as well as taking on a personal assistant at his own cost.
• He was not integrated into the businesses of ITV or BBC.
• Although the contracts with both BBC and ITV were long term (the longest being four years) they were not what could be called full time contracts, so this had limited significance.
• Similarly, the fact that the ITV and BBC contracts made up the bulk of Mr Chile’s income was not particularly relevant – it’s not uncommon for a business to have a small number of good long standing clients who effectively form the backbone of that business.

Overall, it was necessary for the FTT to stand back and look at the circumstances as a whole. In doing so, despite their earlier conclusions on mutuality of obligation and control, it appeared that the BBC and ITV contracts were merely part and parcel of Mr Chile’s business, and therefore the IR35 rules did not apply.

Extra time?

As with many IR35 cases, the comments made by the FTT are of wider interest when it comes to the ever thorny issue of whether an individual is an employee, or self-employed.

This case is particularly interesting given that, despite the required control and mutuality of obligation being present, the FTT still concluded that the threshold for employment had not been met. This approach was also taken in the Upper Tribunal decision of Atholl House, which concerned the broadcaster Kaye Adams and is currently being appealed to the Court of Appeal. It will be interesting to see if that decision is overturned, and what the implications of that may be for Mr Chiles. It could well be the final whistle has not yet been blown.