A Basic question: more on status issues

/ 14 March 2022

Chris Smith

Basic Broadcasting Ltd v HMRC [2022] UKFTT 48(TC) is another case about the employment status of a television presenter.  This time it’s Adrian Chiles.

It’s now well-established that the test of whether a relationship amounts to an employment has three elements.  The first is whether there is ‘mutuality of obligation’ between the parties, and the second whether the putative employer has a sufficient degree of control over the putative employee.  Where both tests are satisfied, the relationship is prima facie one of employment.  And these (particularly the ‘control’ test) are usually the main areas of dispute.

But even if there is sufficient mutuality and control, there is a third question to be asked: are there other factors present which displace the prima facie case and impel the conclusion that the relationship is not after all one of employment?  It’s this third test which features heavily in the Chiles case: the Tribunal was satisfied that there was, prima facie, an employment: but was it contradicted by other circumstances?

Chiles draws heavily on the Atholl House case on which we commented last year (here).  That case has been appealed to the Court of Appeal, so the story on ‘other factors’ is not yet over.  But it’s worth looking at the story so far.

In principle, an engagement that otherwise looks very much like an employment may not be an employment if it’s undertaken as part of a business.  Rowlatt, J put it like this:

‘It seems to me that where one finds a method of earning a livelihood which does not contemplate the obtaining of a post and staying in it, but essentially contemplates a series of engagements and moving from one to the other – and in the case of an actor’s or actress’s life it certainly involves going from one to the other and not going on playing one part for the rest of his or her life, but in obtaining first one engagement and then another, and a whole series of them – then each of those engagements could not be considered an employment, but is a mere engagement in the course of exercising a profession’

That seems clear enough as a principle and was subsequently applied to the case of a vision mixer who worked for a couple of dozen different customers over the course of each year on numerous discrete engagements, most of them lasting no more than a single day.  So, again, this was a business that fundamentally contemplated not ‘the obtaining of a post and staying in it’ but ‘a series of engagements and moving from one to the other’.

However, it’s arguably something of a jump to apply that same principle to cases such as Atholl House and Chiles where the income from the putative employment with a single putative employer accounted for well over half of the annual income of the individual in question and to hold (as was held in both cases) that no employment existed.

It’s also worth remembering that legislation introduced in 2018 (previously an extra-statutory concession) provides that in some circumstances, income from an employment is treated as business income.  This applies if an employment is undertaken in the course of a profession (one of the few remaining instances in which tax law differentiates between ‘professions’ and ‘trades’); both the time commitment and the remuneration are ‘insubstantial’ compared with the income from the profession as a whole; and the employment is ‘related’ to the profession.

That legislation clearly doesn’t help either Mr Chiles or Kaye Adams (the taxpayer in the Atholl House case); even if presenting on television is a profession (dubious) the contested income was far from ‘insubstantial’.  But it does muddy the waters somewhat.

We await the Court of Appeal’s words of wisdom with more-than-usually bated breath.

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Chris Smith

Director of Personal Tax Compliance

T +44 (0)20 8922 9160
E chris.smith@bkl.co.uk

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