HMRC has lost its second IR35 case in a single week. This comes after the First Tier Tribunal permitted an appeal against a previous IR35 decision ordering TV presenter Helen Fospero to pay an eye-watering £80,770 in allegedly wrongfully unpaid income tax and National Insurance contributions (NICs).

IR35 has been a source of controversy and much opposition from professionals working on a time-limited contracting basis via personal service companies (PSCs) since its introduction in 2000 by the then-Chancellor of the Exchequer Gordon Brown. 

Many practitioners working via their own PSCs in procurement and supply chain jobs on a short-term contract basis, notably supply chain and procurement interims, will be familiar with the rules, which apply to all contractors and freelancers that HMRC determines to have been not genuinely self-employed. 

It was designed to prevent workers from supplying their services to an end-client via an intermediate business such as a PSC if they would have been workers formally employed by the client had the intermediary not been used.

Judge Ashley Greenbank dismissed HMRC’s claim in this latest case that Fospero was in fact employed by ITV during the 2012/13 and 2013/14 tax years when she appeared as a guest presenter on Daybreak and Lorraine.

On the contrary, the Judge ruled that she had been legitimately engaged with ITV through a separate intermediary business (her PSC, Canal Street Productions Ltd) with no guarantee of future work. 

Therefore, she was not an employee and did not owe employee income tax and NICs.

As in most IR35 cases, Fospero’s appeal hinged on one of the core tests of IR35 status: mutuality of obligation (MOO), which is one of the essential tests of employment status (and disguised employment) examined by all IR35 tribunals.

In Fospero’s case, Judge Greenbank said that there was no mutuality of work-related obligation as she was clearly engaged on an assignment-by-assignment basis for short-term periods.

As a result, he decided to allow her to appeal.

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