HMRC have suffered another defeat in their campaign in the media sector this time it was Canal Street Productions v HMRC.

HMRC have been hugely unsuccessful in challenging companies under IR35 over the last decade and so when they started a new project, targeting the media sector and presenters, they hoped to turn around their fortunes and chalk up a few wins.

They started well with a win in the Christa Ackroyd case which they have subsequently won on appeal as well. So far so good, and off on the right footing to keep targeting and scaring people. Presenters seem to have strong principles however and not be willing to be bullied by HMRC leading to a flurry of other cases to reach the tax tribunal. These cases include Atholl House Productions, Albatel, Kickabout Productions, Paya Ltd, and most recently Canal Street Productions.

HMRC lost the subsequent 3 cases before pulling back a win in Paya Ltd. This isn’t so bad for HMRC given that the Ackroyd case is an Upper Tier Tribunal decision, but the latest loss of canal street really highlights that HMRC pursue cases they simply shouldn’t and their own manuals and internal understanding of IR35 is out of synch with the courts. HMRC should be more willing to concede cases before dragging the taxpayers through the tribunal system and perhaps need to reconsider their big campaign on this sector.

The two cases that HMRC won both related to work at the BBC and it is clear from those judgments that work for the BBC will be problematic because of the way in which they contract with people. That is not to say that IR35 will automatically apply because HMRC also lost a case where the client was the BBC, but it will be a tougher argument. HMRC are yet to win an IR35 case where the client was a private entity such as ITV or talksport.

HMRC’s stubborn position on mutuality of obligation was again a significant factor towards why they lost the case. The full judgment, for any eager beavers can be found at: https://www.bailii.org/uk/cases/UKFTT/TC/2019/TC07422.html