On 25 October 2019, the Upper Tribunal (UT)1 upheld the decision of the First-tier Tribunal (FTT) that the BBC had sufficient control over Ms Ackroyd (a presenter) such that an employment relationship would have existed had her services been directly supplied (rather than supplied via her personal services company, or PSC).
Whether or not the FTT had erred in law in its finding on “control” was the sole ground of appeal before the UT.
The taxpayer’s argument centred upon the absence of an ultimate control clause in the actual contract between the BBC and the PSC. The view put forward on behalf of Ms Ackroyd was that the FTT had erred in law in implying such a clause into the hypothetical contract between the BBC and Ms Ackroyd.
The UT however held that although the hypothetical contract should properly be “based on” the terms of the actual contract between the BBC and the PSC, it is not correct that the hypothetical contract should merely track the actual one. The UT noted that the IR35 legislation requires that regard be given to the “circumstances” (in order to determine whether an employment relationship would exist were the services to be directly provided) and that these circumstances include the terms of the actual contractual arrangements. It was therefore open to the FTT to consider whether the hypothetical contract should include terms not in the actual contract. The UT noted in particular that the fact that the actual contract was detailed and was negotiated, and included a “whole agreement” clause, did not serve to limit the FTT’s scope in terms of the provisions that could be implied in the hypothetical contract.
The taxpayer also submitted that the FTT erred in law in reaching a view that a “framework of control” existed on the particular facts. The taxpayer argued that the BBC lacked “effective sanctions” to control Ms Ackroyd (for example, she had no line manager and was not subject to formal appraisals). A distinction was made (on behalf of the taxpayer) between control over a worker’s output, and control over input. It was (so the taxpayer’s argument went) control over input that mattered for present purposes, and the BBC did not have this. The UT rejected this argument.
The UT held that the FTT had been entitled, based upon the facts before it, to conclude that ultimate control of Ms Ackroyd rested with the BBC. Such facts included that the BBC could dictate the stories covered by Ms Ackroyd, the people she interviewed and the days she worked.
