Lorraine Kelly has escaped a £1.2 million tax bill after a judge described her as an ‘entertaining lady’ who is her own boss.
Kelly, 59, locked horns with the tax authorities over claims that the company through which she provides her services to broadcasters is just a front.
In 2016 HM Revenue and Customs presented her with an income tax bill for almost £900,000, plus national insurance contributions of over £300,000.
But now she has scored a victory after a tax judge described her as an ‘honest, intelligent’ woman who is a super-talented freelancer.
Working for numerous broadcasters, she picks her own work – once even turning down Elton John for an early hours interview that didn’t meet her schedule.
She had created her own ‘persona’ and ‘brand’ and that is what broadcasters wanted when they took her on, said Judge Jennifer Dean.
The dispute hinged on a contract the Scottish star signed with ITV Breakfast in 2012 to present the ‘Daybreak’ and ‘Lorraine’ shows.
In 2016 HM Revenue and Customs presented Lorraine with an income tax bill for almost £900,000, plus national insurance contributions of over £300,000
The dispute hinged on a contract the Scottish star signed with ITV Breakfast in 2012 to present Daybreak and Lorraine shows
She did the deal through her services company, Albatel Limited, but HMRC insisted she in reality became an ITV employee.
Kelly told Judge Dean she was ‘baffled’ by HMRC’s attitude and denied that tax and national insurance should have been deducted from her income under the PAYE system.
She said she had been ‘freelance’ since 1992 and had since then worked for the BBC, Channel 4, Scottish TV, Sky and ITV, also writing weekly columns for the Sun newspaper.
She considered it an ‘honour and a responsibility’ that she is one of the handful of TV stars whose names are in the titles of their shows.
She can endorse commercial products however she likes, launching a clothing range for JD Williams, acting as a brand ambassador for Avon and appearing in an online advert for furniture company, Wayfair.
Giving an example of her independence, she said she had refused to interview Elton John on a live link from Australia at 4am as she was filming with the BBC later in the day.
Explaining the ‘give and take’ in her relationship with ITV, she said she had been absent from the broadcaster’s morning schedule for four weeks in 2017 when she went on an expedition to Antarctica
Judge Dean said: ‘Ms Kelly explained she was baffled by HMRC’s reluctance to accept that she is an entertainer….she explained her frustration at the manner in which HMRC had conducted the inquiry.’
Andy Chamberlain, IPSE’s Deputy Director of Policy, commented: “What this judgement hammers home irrefutably is that HMRC are completely in the dark about their own tax legislation.
“Lorraine Kelly’s case is the fourth of five IR35 cases that HMRC have lost since 2018. It is now clear that they have wrongly been hounding many BBC and ITV presenters over a tax law they do not understand themselves.
“The government, however, has said that from April 2020, private businesses across the UK will have to determine the IR35 status of their contractors.
“This judgement should be a wake-up call to government that it cannot expect businesses to understand a tax law that it cannot even implement itself.”