ESM7330 - Case Law: Kickabout Productions Limited v The Commissioners for Her Majesty’s Revenue and Customs

Point at Issue 

Whether the relevant aspects of the intermediaries legislation contained in sections 48 to 61 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”) and in the Social Security Contributions (Intermediaries) Regulations 2000 (the “Regulations”) applied to the services Mr Paul Hawksbee provided as a radio presenter to Talksport via his personal service company Kickabout Productions Ltd (KPL).  


Facts 

  • At the time of the FTT hearing, Mr Hawksbee and his co-presenter had been presenting the ‘Hawksbee and Jacobs’ show (the show) for a period of 18 years.
  • For the three years 2012-13 to 2014-15 Mr Hawksbee obtained approximately 90% of his total income from Talksport through KPL.
  • Mr Hawksbee did not work as a radio presenter for anyone other than Talksport in those tax years. 
  • Mr Hawksbee and his co-presenter had, within certain constraints, freedom to decide the format and content of each episode of the show including inviting guests. OFCOM regulations required the inclusion of news and travel bulletins twice an hour and commercials at set intervals. A ‘dump button’ prevented material recorded within a short period of delay from being broadcast if it breached OFCOM guidelines.
  • In practice, Mr Hawksbee had a high degree of control over the content and format of each episode of the show.  He was not required to read from a script and could choose which topical stories and guests to include as programme features.  In practice, disagreements between Mr Hawksbee and the Talksport production team in relation to the content of any show were resolved amicably, generally with Mr Hawksbee’s opinion prevailing.  However, under both hypothetical contracts between Mr Hawksbee and TalkSport, even though Talksport was in practice happy to give Mr Hawksbee considerable artistic licence, Talksport ultimately enjoyed the contractual right to decide on the format or content of a particular episode of the show . 


First-tier Tribunal

The FTT determined that Talksport had no obligation to provide Mr Hawksbee with work and so there was no ‘mutuality of obligation’.  

In relation to the control test, the FTT found Talksport controlled the where and when but found that of little significance compared to control of the how and what. Although Mr Hawksbee had significant control over the content and format of each show, Talksport had the ultimate right of control over how Mr Hawksbee performed his services, but its control over what services he could be obliged to provide was narrow.

HMRC appealed the FTT’s decision on eight separate grounds. 


Upper Tribunal

The UT disagreed with the FTT and remade the decision. The UT found that under the hypothetical contracts Talksport would be under an obligation to provide Mr Hawksbee with at least some work, not least as a matter of business common sense. The contractual regime would ordinarily have provided Mr Hawksbee with a show to co-present every weekday afternoon, restricting his ability to work elsewhere.

The UT performed their own analysis regarding the framework of control and considered there was sufficient framework for Mr Hawksbee to be regarded as an employee of Talksport under the hypothetical contracts . The UT disagreed with the FTT because Talksport had the ultimate right to decide on the form and content of shows even if Mr Hawksbee had a high level of autonomy.

The UT concluded if it was required of them to consider the level of mutuality of obligation and control as part of an evaluative assessment, then given the facts it would not point away from a contract of employment. Taking all the relevant factors into account, the UT concluded that this case was one of employment.  


The Court of Appeal   

KPL were granted permission to appeal the UT decision on four grounds.

The CoA hearing was heard by the same panel of judges as the Atholl House CoA hearing, since it was acknowledged that both cases had common issues. The Atholl House case summary can be found at ESM7335. 

  1. The CoA supported the UT decision that Talksport did have an obligation to offer Mr Hawksbee work and dismissed the appellants argument that there was no provision obliging Talksport to offer work to Mr Hawksbee.  
  2. The CoA agreed with the UT’s decision, that a lack of obligation on Talksport for them to provide work would have been ‘contrary to business common sense’. Adding there is a ‘solid basis’ for interpreting the engagement of KPL as carrying with it an obligation to offer 222 programmes per year. 
  3.  Mr Hawksbee’s obligation to provide his workdays whenever he was called upon left him unable to take up any other work which would have conflicted with his ability to fulfil those workdays. This left Mr Hawksbee entirely dependent on the discretion of Talksport to offer him work to make a living.
  4. The CoA agreed with the UT’s findings that there was a sufficient framework of control to support a contract of service. 
  5. The CoA dismissed the taxpayer’s evidence on the weight attributed to other elements considered in the concluding evaluative assessment, including length of service and workers’ rights. The CoA confirmed that the UT was entitled to have regard to the length of the relationship before the commencement of each contract.  It was established that the lack of traditional worker’s rights in the contract (both written and hypothetical) is of little, if any, relevance when making employment status decisions.


Appeal Dismissed  


Commentary 

 This case is particularly helpful as it provides commentary on several issues considered when addressing an employment relationship. These include: 

  • Mutuality of obligation. Further establishing that the existence of the necessary pre-conditions of mutuality of obligation and control does not create a prima facie presumption that a contract of employment exists.
  •  Framework of control over skilled workers. Demonstrating that a ‘narrow compass’ to control what a worker does, does not mean control does not exist, skilled workers are often hired to perform specific tasks.
  • The evaluative assessment. The judgment is consistent with the guidance for employment status given by the Court of Appeal judgement in Atholl House handed down by the same panel of judges on the same day.  
  • Employment rights- where the subjective intention of both parties is to create a self-employment relationship, it is entirely consistent for there to be no employment rights set out in the written agreement.