Lorraine’s VERY good morning – as she wins £1.2m f ight with taxman
LORRAINE KELLy has escaped a £1.2million tax bill for her work on ITV after a judge ruled she has too much control over her shows to count as a ‘servant’ of the broadcaster.
In 2016, HMRC said the Scots star owed nearly £900,000 in back taxes and more than £300,000 in National Insurance payments for her work on ITV’s Lorraine and Daybreak shows.
It argued that the firm she used to bill ITV for her work was a front and that she should have been taxed as an ITV employee rather than as a contractor.
But yesterday Miss Kelly won a major victory against the taxman after a judge accepted she is her own boss who has built herself into a brand that broadcasters want to buy, rather like ‘Oprah’.
Instead of hiring Miss Kelly as an employee, ITV bought ‘the brand and individual personality of Lorraine Kelly’ as a ‘product’ when it signed a contract with her in 2012, a tribunal heard.
Judge Jennifer Dean accepted the star’s arguments and praised Miss Kelly as an ‘honest, intelligent’ woman who gave ‘cogent’ evidence to the hearing.
She added: ‘Contrary to being part of a jigsaw, Miss Kelly was the jigsaw.’
Glasgow-born Miss Kelly told the judge she had been freelance since 1992, working for the BBC, Channel 4, Sky and The Sun newspaper in addition to ITV.
She also described how, on Lorraine, she decides who appears, which angles to take with interviews, and which items to drop or allow to run over.
On one occasion, the daytime host turned down an interview with Sir Elton John because it would have taken place at 4am, which would have interfered with her work for another broadcaster.
Miss Kelly also told the first tier tribunal that she was ‘baffled’ by HMRC’s refusal to accept she is an ‘entertainer’ and not a current affairs presenter. She argued that she should be classed as an entertainer or a ‘theatrical artist’, because she acts ‘every day as a version of herself’ on air. An HMRC spokesman said yesterday it was ‘disappointed’ with the ruling.
He added: ‘We will carefully consider the outcome of the tribunal before deciding whether to appeal.’
Employees of companies hand over up to 45 per cent of their pay cheques in tax and National Insurance, while contractors who charge for their services via independent companies pay as little as 19 per cent.
The ruling will be studied with interest by other TV personalities who are being pursued by HMRC for tax because they were paid via their own companies instead of as employees.
Last October, Eamonn Holmes, the host of ITV’s This Morning, disclosed that he was also fighting a legal battle with the taxman over claims that he could owe more than £2million, dating back to 2011.
He said at the time: ‘If they win against me, they will go after everyone else.
‘I’ve been freelance for 28 years, and that’s been OK. Now they’ve said it’s not OK.’ Last night, former agent Jon Roseman – who used to represent presenters including Kate Garraway and Jill Dando – described the judgment in Miss Kelly’s case against HMRC as a ‘victory for common sense’.
‘If they can afford to defend it, [other presenters] would almost certainly win because it was a wise ruling for once by the court,’ he added.
But he noted that many TV personalities would still be wary of taking on HMRC because of the high costs involved.
Mr Roseman said: ‘The problem is, if you want to fight it, you’ve got to have a lot of money – this must have cost Lorraine a lot to fight – and you won’t always recover your costs.’
‘A victory for common sense’