An IR35 case law look back: contractor must-knows for 2025-26

The divisive issue of establishing whether a contract is “inside IR35” or “outside IR35” is hashed out in decades of employment status case law.

But while historic, this case law is also continually evolving, reflecting changes in the courts’ interpretation of IR35 status tests, and the increasing boldness of HMRC in their enforcement approach -- something 2024 saw in abundance, writes Charlie Hemsworth, director of Bauer & Cottrell.

Potted IR35 case law history

There have been over 40 IR35 cases escalated to First-tier Tribunal level and above since the rules’ inception in 2000.

And around half of those were heard and concluded in the last six years alone.

Your (cautionary) Christmas reading

Understanding IR35 court rulings as a contractor is essential, as they set important precedents which shape the way that IR35 status decisions subsequently get made, by end-users and other parties (notably under the off-payroll working rules).

Here, exclusively for ContractorUK, are five key IR35 and employment status cases that offer practical (and cautionary) lessons for businesses and contractors dealing with IR35 and by extension, the OPW rules.

1. Professional Game Match Officials Ltd (PGMOL), 2024.

In a festive nutshell?

A fresh take on Mutuality of Obligation (MoO) and Control.

Winner?

TBC.

Why is the PGMOL case an IR35 cracker?

While not an IR35 case in itself, the ongoing PGMOL case – centred around the employment status of football referees – has already set important precedents.

The case has been through four courts so far, and is currently awaiting a remake of the original decision (in favour of PGMOL) by the First-tier Tribunal.

So whether the referees are deemed employees of PGMOL remains to be seen, but the latest PGMOL ruling by the Supreme Court -- published in September 2024 -- has laid down fresh ground rules on MoO and control.

Mutuality of Obligation (MoO) at PGMOL

The Supreme Court agreed with HMRC’s historical view that simply an exchange of work-for-pay constitutes MoO.

Both parties had the option to cancel engagements before match day.

But Mutuality was present within the individual contracts, beginning when the referees accepted their match appointments, continuing through the match and concluding only after the submission of the match report.

Control in PGMOL

It was found that even though the referees operated independently during matches with no scope for supervision or intervention, PGMOL's broader contractual rights of Control over their general conduct, including rights to impose penalties and provide coaching and assessments, tipped the balance in HMRC's favour.

Key IR35 lessons from the Supreme Court’s ruling in PGMOL

• Mutuality of Obligation, or supposed lack of it, will now likely carry little weight in any defence of IR35 status, as the courts now recognise MoO as present in any contractual agreement involving work for payment.

• The threshold on control appears lower: even where there is no scope to direct how work is done, “rights” granted in the contract alone may be enough to establish a sufficient framework of control.

2. S&L Barnes Ltd (Rugby commentator Stuart Barnes), 2024.

In a festival nutshell?

A key case for understanding why the contract matters, massively.

Winner?

HMRC.

Why is the Stuart Barnes case an IR35 cracker?

Stuart Barnes’ IR35 case is a cautionary tale about the difference between how a contractor works in practice and how the terms of their contract are viewed by the courts.

Barnes, an ex-rugby player turned commentator, provided services to Sky TV through his limited company, and initially, the First-tier Tribunal found him outside IR35.

‘The Voice of Rugby’

The FTT based its decision on Barnes’s:

-          autonomy;

-          control over his schedule;

-          multiple client engagements as the “voice of rugby.”

All three factors indicated genuine self-employment.

The UT kicked Barnes’ FTT win into touch

However, on appeal by HMRC, the Upper Tribunal reversed this decision, focusing more on the contractual framework than on Barnes’ working practices.

The UT decided that contractual issues such as Sky’s right of first call on his services and control over aspects of his work such as scheduling, pointed to an inside IR35 position.

Key IR35 lesson from the Upper Tribunal’s ruling in Barnes

• Contracts matter: The now-concluded Barnes case underlines the importance of contracts aligning closely with working practices, as contractual elements like Control and MoO weighed heavily in the UT's ruling. So, don’t count on good working practices alone, if your contract isn’t pulling its weight.For a solid IR35 defence, a well-crafted contract that truly reflects autonomy and independence is your best ally.

3. Atholl House Productions Ltd (Kaye Adams), 2023.

In a festive nutshell?

A protracted case highlighting the importance of being ‘in business on your own account.’

Winner?

Contractor /Taxpayer

Why is the Kaye Adams case an IR35 cracker?

The case of Atholl House Productions Ltd, involving TV and radio presenter Kaye Adams, stands as one of the most significant IR35 cases in history.

The Kaye Adams case became the first IR35 case to reach the Court of Appeal (along with Kickabout Productions – see below). The case provided significant clarifications around MoO, Control, and what it means to be truly “in business on your own account.”   

The dogged taxman

Serving to illustrate just how dogged HMRC can be, the case went through four courts over almost a decade.

Ms Adams’ engagements with the BBC were scrutinised over issues such as the BBC’s editorial control and the absence of substitution rights.

However, the FTT found strong evidence that Adams was IBOOA (‘In Business On Own Account’) as an experienced, independent freelancer. Not more than 50% of Adams’ income came from the BBC. And this income was over a 20-year freelance career -- a key factor that clinched her win.

Upper Tribunal, Court of Appeal, and back to the FTT went Kaye…

HMRC’s appeal to the Upper Tribunal was dismissed, but the Court of Appeal agreed with HMRC that the IBOOA test shouldn’t outweigh other factors, ruling that the UT overemphasised Adams’ broader career rather than the specific BBC contract terms.

The case was eventually sent back to the First-Tier Tribunal, with a direction to focus on the specific terms of the BBC engagements. Thankfully for Ms Adams, the second FTT hearing ultimately concluded that the overall picture demonstrated outside IR35.

Key IR35 lesson from the Kaye Adams case

• Weight of IBOOA: This case showed that being IBOOA can definitely help sway things in favour of a contractor’s IR35 position. However, the Court of Appeal’s ruling was clear: IBOOA alone isn’t enough to seal the deal, so relying on it alone is risky.

4. Red White & Green Ltd (Eamonn Holmes), 2023.

In a festive nutshell?

It’s a masterclass in being firmly ‘inside IR35’ -- almost serving as a ‘what not to do’ if you want to demonstrate an absence of a master-servant relationship.

Winner?

HMRC

Why is the Eamonn Holmes case an IR35 cracker?

Another high-profile IR35 case involving a TV presenter was when Eamonn Holmes’ engagements with ITV were scrutinised by HMRC.

Holmes had worked with ITV for around 15 years -- a long-standing relationship that raised questions about his IR35 status.

Holmes’ contract with ITV included no substitution rights, and both parties agreed on the presence of MoO.

ITV called the shots on his work, dictating the content; format, and timing of his shows to meet Ofcom guidelines.

‘There’s nobody more freelance than me’

Despite some quite memorable comments to the contrary (“There’s nobody more freelance than me”), Holmes also enjoyed employee-type benefits -- a company car; clothing allowances and insurance cover. Holmes was paid even if shows were cancelled.

Incredibly, then, Holmes challenged the FTT’s decision against him and in agreement with HMRC, in the Upper Tribunal.

However, the UT upheld the FTT’s judgment, finding that ITV’s level of control, combined with the employment-like benefits, demonstrated Holmes was firmly inside IR35.

Key IR35 lesson from Eamonn Holmes case:

• What not to do! This case is a great example of everything that can go wrong if you’re looking to avoid IR35 -- client control, personal service, significant engagement length and employment-like perks. IT contractors may not find much in common with the Red White & Green case, at least not on its surface. But the lesson here is that when the underlying relationship so clearly mirrors employment, it’s simply an ‘inside IR35’ situation and trying to argue otherwise only prolongs the inevitable.

5. Kickabout Productions Ltd (Paul Hawksbee), 2022.

In a festive nutshell?

This case proves that long-term, exclusive clients can be a slippery slope.

Winner?

HMRC.

Why is the Paul Hawksbee case an IR35 cracker?

The case of Kickabout Productions, involving Talksport radio presenter Paul Hawksbee, was the other case along with ‘Atholl House’ to first reach the Court of Appeal (CoA). 

Having initially won at the First-Tier Tribunal, Hawksbee then lost at the Upper Tribunal and Court of Appeal.

Weakness in numbers 

Hawksbee had been working with Talksport for 18 years.

His contract required him to provide services for at least 222 days per year, with Talksport having 1st call on his time.

Although he retained some creative freedom over the show’s format, Talksport’s contractual “rights” of control ultimately pointed away from self-employment. There was no substitution clause due to the nature of his role, and any time off required pre-approval.

Mutuality was also present in the contract, with Talksport obligated to provide work and Hawksbee obligated to perform. Hawksbee earned the vast majority of his income from Talksport during this period.

The Hypothetical contract & The Ready Mixed Concrete case

A noteworthy aspect of the CoA’s ruling was the clarification on applying the three-stage process when analysing the “hypothetical contract:”

• Stage 1: Identify the actual contractual terms between all parties and the relevant circumstances of the engagement.
• Stage 2: Ascertain the “hypothetical contract” -- as if the individual were directly engaged by the client.
• Stage 3: Evaluate whether the hypothetical contract would be one of employment, referring to the three-step ‘Ready Mixed Concrete case’ test: Mutuality of obligation, Control, and the overall nature of the relationship.

Key IR35 lessons of Kickabout Productions

• Exclusive, long-term engagements raise reg flags: while not a status test in itself, duration didn’t help here. In fact, the lengthy, exclusive contractual tie-up between Hawksbee and Talksport suggested dependency, pulling in factors that leaned toward an inside IR35 position.

• Proactivity is key: Kickabout is another case to remind us just how challenging IR35 decisions can be. Hawksbee’s determination to see his appeal through to the CoA won’t be affordable for many contractors.Ensuring you have watertight contracts and supportive working practices from the outset is key to demonstrating “reasonable care” over IR35 status.

This IR35 case law refresher in your stocking? I can think of worse bedtime reading this Christmas…

As this article hopefully shows, the surge of IR35 cases in recent years and their marathon journeys through the courts for the limited company contractors (some even into decades), shows just how complicated and costly determining IR35 status can be.

HMRC is appealing more and winning more.

And the constant advancement of IR35 case law means some well-known, older IR35 cases might have very different outcomes if they were heard today.

For contractors facing or undertaking IR35 assessment, here’s eight essentials to have on your (Christmas) list

1. IR35 is about the “overall picture.” It relies on a combination of factors that together paint an overall picture, and there is no single ‘gotcha’ factor.  

2. Forget MoO as a defence. If there’s a contract, MOO is present. All other practices need to be strong and favour an outside IR35 position.

3. Contracts must reflect reality. Written contracts must reflect working arrangements, with both supporting “Outside IR35”.  Inconsistencies will weaken an IR35 defence.

4. Long-term exclusivity increases risk. Long-term dependency on one client can raise red flags in HMRC’s eyes. If this applies to you and your limited company, it’s time to get your ducks in a row and ensure you have lots of evidence to support your (presumably) outside IR35 position.

5. IBOOA. Being able to demonstrate you are genuinely “in-business” (other clients, badges of business, business features etc) will certainly help -- but it won’t be enough on its own.

6. “Rights” of control suffice. If a client has a contractual right to direct the work, even if they don’t exercise such a right, this can count as “Control” in an IR35 case.

7. Stay up-to-date. With changes, developments and IR35 / status case rulings coming thick and fast, find a reputable and unbiased source of genuinely expert information on IR35 and the off-payroll working rules. Compare that with other sources, too. 

8. If in doubt, speak to an expert. IR35 can be extremely tricky, and professional advice can help clarify your position and ensure “reasonable care” is taken. With hefty tax costs, legal fees, and reputational damage almost inevitable for those who get caught by IR35, the season of goodwill is an ideal occasion to review where and how a status adviser could help you enjoy an HMRC-free new tax year and beyond.