The BBC are apparently in talks with HMRC with regard to reaching a solution for determining the IR35 status of its off-payroll workers, in light of the changes to IR35 Legislation introduced in April last year.
It’s no surprise that HMRC have had to enter into further discussions with the BBC with regard to the treatment of its off-payroll workers after the debacle highlighted by the Select Committee Hearing, in March this year. During the meeting the difficulties of administering the legislation and the impracticalities of using the CEST tool within the media industry, was highlighted as well as the stress caused to BBC workers.
Contained within the BBC’s website is a raft of information concerning ‘freelancers’ and how they can operate outside of IR35. Historically freelancers working behind the camera such as camera men could apply for an ‘LP10’ letter from HMRC, which would exempt them from IR35, if services were provided for 10 days or less and the freelancer responded positively to a questionnaire concerning the working practices of the Freelancer. Historically HMRC, had what was referred to as a ‘grading list’ which would indicate which workers should operate inside of IR35 or could operate outside of the IR35 rules.
The BBC engaged Deloitte to advise on IR35, to the BBC and its workers, following IR35 reform in the public sector. In a presentation (held in June 2017), delivered by Mark Groom, who specialises in employment status and is Tax Partner in Deloitte, it was clear that whilst the tax advice being provided was helpful, it was not necessarily tax advice which the workers needed, but simply straight answers to their questions, concerning the impact of the legislation to them depending on their specific circumstances.
This is not the first time that HMRC have entered into special arrangements for specific industries. HMRC’s ‘grading list’ which has since been relegated to the archives, demonstrates HMRC intention that the Check of Employment Status for Tax (CEST) Tool should be used by all, however as indicated above it was established during the Select Committee Hearing, that the CEST tool would not work for the media industry and it became a laughing stock, with Radio Presenter, Liz Kershaw stating that she had been asked if she provided her own plant machinery….
The BBC are not the only ones struggling with changes to IR35 in the public sector. Many NHS trusts have been adopting a policy of making blanket inside IR35 decisions for their off-payroll workers, for fear of being landed with hefty penalties should they be found to have been providing incorrect decisions on employment status.
The fact that the BBC are in talks with HMRC to reach a solution suggests that it may be possible for other public-sector bodies to do so too, and HMRC need to be wary of setting any precedent in this regard, but no doubt there was a certain amount of pressure for HMRC to be seen to take some action due the heavily publicised levels of stress caused to BBC workers as a result of the change in legislation.
Despite this, that HMRC may be considering adopting some ‘special’ rules with the BBC, further demonstrates that the off-payroll rules, particularly the CEST tool, as it stands, does not work for all public-sector bodies, and may well not work for all private sector companies too. This should serve as a warning to HMRC, prior to rolling out IR35 universally, otherwise HMRC may find themselves entering more ‘special’ arrangements, which could involve a lot of time and additional resources, which completely contradicts one of HMRC’s aims of reform which is to; “greatly improve the efficiency of the compliance process.” It seems that HMRC cannot have their cake and eat it.