ESM7335 - Case Law: The Commissioners for Her Majesty’s Revenue & Customs v Atholl House Productions Ltd

Point at issue 

Whether the relevant aspects of the “Intermediaries legislation” contained in Chapter 8 of Part 8 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 Kaye Adams provided to the BBC via her own service company Atholl House Productions Ltd (AHPL).   


The Facts

  • AHPL is the personal service company of Ms Kaye Adams, who provides services for the BBC and other media organisations.  
  • During the relevant years, 2015/16 and 2016/17, AHPL was engaged under two successive annual contracts with materially identical terms, for Ms Adams to provide services to BBC Radio Scotland. Ms Adams presented a weekday morning programme on BBC Radio Scotland called “The Kaye Adams Programme”. 
  • Under both BBC contracts AHPL provided Ms Adams services for a ‘minimum commitment’ of 160 programmes for a ‘minimum fee’. If the BBC extended the 160 programmes, AHPL would be entitled to invoice and be paid for the additional programmes.
  • The BBC contract stated that Ms Adams would read and comply with the BBC’s Editorial Guidelines and Guidance and uphold the BBC’s reputation for impartiality, integrity, independence, and decency. Ms Adams was also required to comply with BBC values, editorial policies, and those of regulatory bodies such as OFCOM. 
  • Contractually the services of Ms Adams to the BBC were not exclusive but the BBC had first call on the services of Ms Adams, subject only to any prior professional commitments of Ms Adams, as confirmed to the BBC.      



The First-tier Tribunal (FTT) and Upper Tribunal (UT) 

Although each hypothetical contract met the first two of McKenna J’s conditions in Ready Mixed Concrete, the FTT determined there were several other written contractual terms inconsistent with a finding of a hypothetical contract of employment.   

Key to the FTT decision that the engagement was not one of service, was that following the Autoclenz principle, first call and exclusivity did not form part of the true agreement. 

The UT concluded that the FTT wrongly applied Autoclenz because it did not have sufficient basis to decide those terms were not part of the true agreement. The UT dismissed HMRC’s appeal and remade the FTT decision. 

Whilst the conditions at the first and second stages of the Ready Mixed Concrete test were met, the UT applied a narrow test of comparing Ms Adams' BBC activities to her 20 years' work self-assessed as an independent contractor at the third stage of the Ready Mixed Concrete test when concluding that Ms Adams was in Business on Own Account.


The Court of Appeal (CoA) Decision

The CoA accepted HMRCs core argument that the third stage of the Ready mixed Concrete test as applied by the UT was flawed and allowed HMRCs appeal.   

The CoA found the following errors in the UT approach: 

  1.  An individual can be employed and self-employed during the same tax year. It is therefore not the activities performed that matter, but the capacity and conditions under which they are performed. 
  2. Terms of other engagements cannot be assumed to be self-employment. It is the terms of the hypothetical contracts which are in issue, not the terms of other engagements. 
  3. Apart from considering the number of shows Ms Adams had to present (160), there was no consideration by the UT of any other terms within the hypothetical contract.  
  4. Whilst if it was reasonably known to the BBC that Ms Adams had history as an independent contractor, this should not be ignored, but it goes no further than that. What was critical remained the years in dispute.    

The CoA set aside the UT decision and the case was eventually remitted back to the FTT.  

The CoA gave authoritative new guidance on the following points in its judgment.

  • That Ready Mixed Concrete and Hall v Lorimer are not two different tests leading to different conclusions, both are essentially the same test. Where mutuality of obligation and a ‘right of control’ are necessary pre-conditions to meet the irreducible minimum required for employment, then the third stage is a multi-factorial evaluative assessment to determine employment status.
  • Once established, then consideration of all the terms of the contract needs to take place at the third stage of the Ready Mixed Concrete test to determine employment or self-employment. Mutuality of obligation and the extent of control can be considered again at the third stage of the Ready Mixed Concrete test as part of a multi-factorial test and afforded appropriate weight in an evaluative exercise.
  • The admissible factors are not confined to the terms of the contract; however, the terms of the contract remain central to the enquiry.
  • A person can perform similar services as both employed and self-employed. For that purpose, it is a relevant fact if known or reasonably available to the putative employer, that the individual performs similar services as an independent contractor, but it goes no further than that.
  • The Autoclenz principle (true agreement of the parties) is only applicable to a statutory interpretation of defined terms. 
  • That if the first and second stages of the Ready Mixed Concrete test are met, putting a ‘gloss’ of prima facie conclusion of employment is not of assistance. There will necessarily have to be some terms pointing away from employment to determine a self-employed status. The first and second stages of the Ready Mixed Concrete test are necessary pre-conditions for employment only. 


Admissible Factors  

Where the issue is interpretation of a contract (or hypothetical contract), only facts admissible to the factual matrix should be considered. To be admissible, a fact must be known, or reasonably available to both parties at the date of the contract. The position under earlier contracts between the same parties is admissible as part of the factual matrix if it is known to both parties at the date of the relevant contract. Knowing that a person has a long career as a freelancer may be relevant, but only if the precise terms of those other engagements have been disclosed by the worker to the engager and have been correctly interpreted by the engager. 


Autoclenz Principle  

 The decision sets out clear context as to when terms of a contract can be disregarded under Autoclenz and when they cannot. Where the task is comparing an engagement against a statutory description, such as whether an individual is a ‘worker’as defined  in employment rights legislation, the approach adopted in Autoclenz can apply. As s49 ITEPA gives no special meaning or definition of employee, that determination will be made through an application of common law rather than statutory interpretation, so the approach adopted in Autoclenz cannot apply.    


Remitted FTT Decision

The hearing of the remitted appeal took place in October 2023.

The FTT concluded that in their view this was a very finely balanced case, and their conclusion had been reached with some diffidence.  

‘There are undoubtedly features of the terms of the hypothetical contracts and the circumstances in which the hypothetical contracts would have arisen which point toward the conclusion that the hypothetical contracts were contracts of employment. Those features are essentially: the degree of commitment which each hypothetical contract was likely to entail; the length of the relationship between the BBC and Ms Adams; and the extent of the mutuality of obligations and the rights of control to which the hypothetical contracts gave rise’.

However, when those factors were further considered, the FTT said they were ‘outweighed by the factors which point in the direction of a relationship of self-employment in this case’.

The factors the FTT highlighted as pointing to self-employment were:

  • The meaningful amount of time available for other engagements over Ms Adams' career
  • The income and time spent with other organisations, pointing away from commitment with the BBC, noting that while a long relationship can be indicative of employment, it is also possible to retain a status of self-employment, when other features point in that direction.

 The FTT listed the reasons they believed pointed to the BBC not treating Ms Adams as an employee and stated ‘there was an unequivocal statement in each written agreement to the effect that the parties did not intend to create a relationship of employment’. The FTT concluded that, on balance, the terms of the hypothetical contracts and the circumstances in which the hypothetical contracts arose supported a conclusion of self-employment.


Appeal Upheld.