Am I an employee but don’t know it?

In a previous article, we discussed the implications of getting your employment status wrong and how a few high-profile individuals have been questioned by HMRC.

Since then, an updated IR35 legislation came into effect on 6 April 2021 and HMRC have now begun to flex their muscles to enforce those rules. We have recently seen television presenter Adrian Chiles in a tax dispute with HMRC relating to his employment status from 2012 to 2017. HMRC argued that Mr Chiles was an employee of the broadcasters he worked for during that time period. The implications of his employment status were worth an estimated £1.7 million in unpaid tax. Following a tribunal hearing, Mr Chiles successfully argued that the IR35 legislation did not apply to his circumstances. While this may be deemed a success by Mr Chiles’s advisors, how does one account for the mental and financial costs Mr Chiles encountered by having to defend himself despite always having paid his taxes correctly?

Don’t be fooled into thinking that HMRC will only target high profile individuals to maximise their potential lost tax income. As we ease out of the COVID-19 pandemic, HMRC will have even more time to focus on investigations and will be looking to enforce their new IR35 rules in the coming months and years.

Often, a tribunal decision is not a binding decision. There have been cases where HMRC have been successful as was the case just a few years ago with Christa Ackroyd, another television presenter. From afar, Ms Ackroyd and Mr Chiles roles don’t seem too dissimilar, but for tax purposes, they were.

IR35 may result in you being taxed as an employee, but you still may not have the legal rights of an employee. It’s the worst of both worlds!

If you’d like to find out more information or receive advice regarding your employment status, please contact our EQ Professions team at professions@eqaccountants.co.uk or by calling one of our offices.