‘Theatrical’ Kelly wins over tax case judge
THANKS to her warm and friendly manner, Lorraine Kelly is one of daytime television’s most popular stars, but in an unusual court ruling a tax tribunal judge has decreed that her cheery public persona – for which ITV pays her more than £1million per year – is a performance.
That judgment meant Kelly won her appeal against a £1.2million tax bill because, as part of its case, HMRC had argued that Kelly wrongly claimed her agent’s fees as tax deductible – a dispensation only allowed to “theatrical performers”, classed as actors, singers, musicians, dancers or theatrical artists.
Kelly’s lawyers had argued that she was an “entertainer” and therefore should be included in the category.
In her ruling, Judge Jennifer Dean said: “Ms Kelly presents a persona of herself; she presents herself as a brand, and that is the brand ITV sought when engaging her.
“All parts of the show are a performance, the act being to perform the role of a friendly, chatty and fun personality. We should make clear we do not doubt that Ms Kelly is an entertaining lady, but the point is that for the time Ms Kelly is contracted to perform live on air she is public ‘Lorraine Kelly’.
“We have no hesitation in concluding that Ms Kelly is a ‘theatrical artist’.”
Kelly told the tribunal that she played “a version” of herself on her current ITV show, Lorraine, and her previous show, Daybreak, adding that the latter involved her doing comedy skits with Aled Jones and appearing in a bikini, adding that this was not the sort of content that Jeremy Paxman would have provided on Newsnight.
The tax tribunal in London heard that Kelly was paid £1million by ITV in 2012-13, rising to £1,102,500 in 2014-15, over the period targeted by HMRC.
Her total earnings, including work for other media groups and brands, were up to £3million per year. HMRC had brought a case against Kelly under IR35 legislation and a crackdown on personal service companies, which she had used to manage her earnings.
HMRC claimed that Kelly should have paid income tax and National Insurance contributions, as the nature of her work for ITV meant she was effectively an employee.
But Kelly successfully argued that she was a freelancer, saying that she decided her own hours, what items should be included in the show and when she works. She did not receive sick pay or a pension, and there was no guarantee that her contracts would be renewed. The judgment concluded: “The relationship between Ms Kelly and ITV was a contract for services and not that of employer and employee.”
The ruling could have an effect on hundreds of presenters from the BBC and elsewhere.
David Chaplin, of the Contractor Calculator site, said: “It is astonishing, given the level of ultimate control Lorraine Kelly exercised, that this case ever got to court.
“These attacks on presenters have been going on for years now, and are nothing short of a witch-hunt and a misguided attempt to shore up the Treasury’s coffers by using outdated legislation.”