The taxman had issued Chiles’ company Basic Broadcasting Ltd two bills, one for income tax and one for national insurance contributions, which totalled £1,249,433 and £460,739 respectively. These tax bills followed a five-year period of work Chiles did at ITV and the BBC via his company.
The period in dispute stretched between April 6, 2012, and April 5, 2017, relating to three BBC contracts and two ITV contracts, according to FTAdviser's sister publication, the Financial Times. Chiles’ firm was incorporated back in 1996.
HMRC had claimed the work Chiles carried out during this period fell within IR35, a term which refers to anti-avoidance tax legislation designed to tax 'disguised' employment at a rate similar to employment.
At the BBC, Chiles featured on shows such as The One Show and Match of the Day 2, whilst at ITV he featured on Daybreak.
But at a first-tier tax tribunal yesterday (February 16), Judge Cannan ruled in Chiles’ company’s favour, concluding the work contracts during this period were for services and not contracts of employment, meaning IR35 did not apply.
HMRC said it “will carefully analyse the outcome of the tribunal before considering next steps”. The taxman can now appeal Judge Jonathan Cannan’s verdict.
The government department told the Financial Times it has won 10 out of 22 IR35 cases it has pursued since 2010.
In November 2021, former Sky Sports TV presenter Dave Clark lost his IR35 appeal against HMRC, which saw him handed a £281,000 tax bill. TV sports host Gary Lineker's £4.9mn tax battle continues, whilst broadcaster Lorraine Kelly won her case over a £1.2mn bill.
Dave Chaplin, chief executive of compliance solution firm IR35 Shield, who attended the tribunal, said the television and radio presenter had been “subject to more than seven years of hell” with the investigation in a manner “no-one should have to endure”.
Chaplin added: “The judgement unequivocally shows that HMRC was entirely wrong in its assessment and failed to consider all the circumstances. He is the victim of a very poorly run investigation by HMRC inspectors.”
The first of Chiles’ hearings took place in November 2019, five years after HMRC opened its investigations.
“While HMRC pursuing high profile individuals for vast sums of tax will always concern other freelancers and contractors, it’s important to make clear that Chiles’ working relationship was very different to, say, an IT contractor or freelance marketeer,” said Seb Maley, chief executive of IR35 insurance provider.
“In our experience, the majority of contractors are able to show they are genuinely self-employed with relative ease.”
