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UK – TV presenter faces £2 million tax probe over freelance earnings

08 October 2018

Freelance presenter Eamonn Holmes is being investigated as part of a test case by officials from HM Revenue and Customs. It is estimated that Holmes is facing a tax bill of up to £2 million.

The Belfast Telegraph reports that Holmes, who presents for ITV, is paid through his own limited liability company called Red, White and Green Ltd, which means he pays less tax than he would do if he was an employee.

The HMRC regards this arrangement as a device to avoid tax, as corporation tax on company profits is substantially lower than income tax paid on salaries and wages.

"I've been freelance for 28 years and that's been okay,” Holmes said. “Now, they've said it's not okay. They have reinvented the rules in the past couple of years.”

If HMRC wins its argument in court, Holmes has to fork over double his existing tax bill, and it is also possible that Holmes will have to pay national insurance contributions as well as penalty payments.

Julia Kermode, chief executive of The Freelancer & Contractor Services Association, commented on the investigation, said that it is essential that HMRC does not penalise everyone working through Personal Service Companies in a blanket fashion as “they bring much-needed flexibility to both the freelancer and businesses that engage them on a short-term basis”.

Dave Chaplin, CEO and founder of contracting authority ContractorCalculator, also commented, “HMRC changed the rules for IR35 in the public sector from April 2017, and now if they find a ‘deemed employee’ the Employers National Insurance is paid by the firm hiring the contractor.”

“If ITV was a public sector broadcaster and Holmes’s situation was under the IR35 microscope under the new rules, ITV would have a tax bill to pay, and Eamonn Holmes would probably end up with a tax refund,” Chaplin said. “I sincerely hope that Holmes, and other presenters under HMRC’s spotlight win their cases, and then finally HMRC can stop harassing the self-employed with this ridiculous piece of legislation.”

Holmes said that if he loses the case, then other ITV stars will be targeted next.

Earlier this year it was found that more than 100 BBC presenters were facing massive tax bills after HMRC won a case against regional presenter Christa Ackroyd.

Ackroyd was paid as a freelancer through a personal services company at the request of the corporation, but the HMRC ruled that she should have paid the same level of tax as a BBC employee. A tribunal then ruled Ackroyd would have to pay up more than £400,000.

Qdos Contractor CEO, Seb Maley, commented, “It’s vital HMRC goes about this case and others in the right way, and assesses the unique aspects of Mr Holmes’ and any other presenters’ working arrangement. The taxman cannot simply assume that one presenter’s status sets a precedent for every contractor engaged by ITV.”

“Given HMRC’s unpredictable nature, it’s increasingly important that freelance presenters and all other contractors for that matter are confident of their IR35 status, and can put forward a strong argument that they are genuinely in business on their own account,” Maley said.

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