Media personalities frequently offer their services through corporate vehicles and the tax implications of them doing so have long been controversial. However, in one case, a TV entertainer’s company succeeded in overturning a six-figure Income Tax demand after persuading the First-tier Tribunal (FTT) that she is in business on her own account.
The entertainer established her company in 1992 and was adamant that she had worked on a freelance basis ever since. After the company signed a contract with a national broadcaster, however, HM Revenue and Customs (HMRC) took the view that she had in effect become an employee of the broadcaster and that payments it made to the company in respect of her services should be treated as her personal salary. On that basis, HMRC raised demands for almost £900,000 in Income Tax and over £300,000 in National Insurance Contributions.
In upholding the company’s appeal against those bills, the FTT described the woman as an entertainment star and accepted that she was her own boss. Working for numerous broadcasters, she was at liberty to pick her own assignments. Through the wide variety of her high-profile work, she had established herself as a brand. She was amongst only a handful of entertainers whose names feature in the titles of their shows. She was able to endorse and advertise products without the permission of the broadcaster to which her company was contracted.
The FTT also noted that she was not entitled to any of the perks received by the broadcaster’s employees. Unlike them, she was not obliged to participate in think tanks or training days. The broadcaster made no provision for her pension and she was not entitled to sick pay, holiday pay or other employment benefits.
In overturning the assessments, the FTT concluded that, in engaging her, the broadcaster was not employing a servant, but rather purchasing a product, namely her brand and individual personality. The relationship between her and the broadcaster was that of a contract for services and not that of employer and employee.
