Helen Fospero provided presenting services to ITV through her company, Canal Street Productions Ltd, during the 2012/13 and 2013/14 tax years. Her work included appearances on Daybreak and Lorraine, and ITV was by some distance the company’s biggest client during that period.
HMRC took the view that the ITV engagements fell within IR35 and raised PAYE and National Insurance assessments totalling just over £80,000.
Canal Street disputed that treatment and appealed to the First-tier Tribunal, which had to decide whether Fospero would have been treated as an employee if she had worked directly for ITV. She won the case.
Several findings initially favoured HMRC. Fospero had to provide her services personally, mutual obligations arose each time she accepted an ITV booking, and ITV retained a meaningful degree of control over the broadcasts.
The tribunal then considered the rest of the relationship, including the lack of guaranteed work, Fospero’s wider client base, and how she operated through Canal Street.
Helen Fospero and ITV
Fospero had worked as a television presenter for many years and incorporated Canal Street Productions Ltd in 2002.
During the two tax years prior to the tribunal, Canal Street entered into a series of agreements with ITV Breakfast Ltd for Fospero’s presenting services. Her ITV work included appearances on Daybreak and Lorraine, often when ITV needed cover for other presenters.
The volume of work was substantial. In fact, Fospero carried out 152 engagements on 108 days across the two years, and the ITV work accounted for around 61% of Canal Street’s income in 2012/13 and 72% in 2013/14.
HMRC nevertheless treated the individual engagements as if they fell within IR35 and raised PAYE assessments of £49,426.40 and National Insurance assessments of £31,344.56.
The hypothetical contracts
The tribunal had to decide what terms would have applied had Fospero had contracted directly with ITV instead of supplying her services through her own limited company.
HMRC accepted that the overall framework with ITV would not have made Fospero an employee. The issue was whether each individual presenting booking she accepted under it did.
The tribunal reconstructed the terms of those engagements and applied the employment status principles in Ready Mixed Concrete.
Fospero had to provide the services personally
In the case, there was no genuine right of substitution.
ITV booked Fospero because it wanted her to present. If she could not undertake a particular engagement, ITV would arrange another presenter itself rather than expect Canal Street to provide somebody else.
The tribunal therefore treated personal service as a term of the hypothetical contracts.
Mutuality during individual engagements
The tribunal found sufficient mutuality of obligation once Fospero accepted a particular booking.
At that point she had to carry out the agreed work, and ITV had to pay her for it. Those obligations were enough to satisfy the mutuality requirement during each individual engagement.
No equivalent commitment existed between bookings. ITV did not have to offer Fospero more work, and she did not have to accept future assignments.
One agreement referred to ITV expecting around 20 appearances during the year, but the tribunal did not treat that figure as a guaranteed minimum. It indicated the likely amount of work rather than committing ITV to provide it.
ITV retained control over the broadcasts
ITV also retained significant control over the engagements.
It decided which programme Fospero would appear on, when and where the broadcast would take place and the subjects that needed to be covered. ITV also had final editorial responsibility for the programme.
Fospero still had considerable freedom over how she prepared for an appearance. She carried out much of her own research and was not normally given a script setting out exactly what she had to say.
The tribunal still found that ITV had a meaningful degree of control over Fospero’s work. It decided when and where she appeared, which programme she worked on and retained final editorial control, although Fospero had more freedom over how she prepared and presented than a typical employee.
Work for other clients
ITV was Canal Street’s largest client, but Fospero continued to work for a broad range of other organisations.
During the period covered by the appeal, she worked for between 10 and 20 other clients, including other broadcasters. The next largest client accounted for only around 10% of Canal Street’s income.
Canal Street also used agents to find presenting work and had been trading for years before the ITV engagements under dispute.
The tribunal took that wider activity into account when assessing the nature of Fospero’s relationship with ITV. The ITV work formed a large part of Canal Street’s income, but it sat within a broader presenting business rather than being Fospero’s only source of work.
She was not treated as ITV staff
Fospero’s position also differed in practical ways from that of ITV’s permanent presenters.
She did not have an ITV email address, a permanent workstation or an office. She carried out much of her own preparation and supplied some of her own equipment, including a laptop and earpiece.
She also provided her own clothes for appearances and did not receive the same expenses arrangements as permanent staff.
There was no holiday pay, sick pay or entitlement to other employee benefits.
The tribunal also found that Fospero had not become part and parcel of ITV’s organisation in the same way as its permanent workforce.
Why Canal Street won
Several findings supported HMRC’s case. Fospero had to carry out the work herself, and once she accepted a booking both sides were committed: she had to present and ITV had to pay her. ITV also decided when and where she appeared, which programme she worked on and retained final editorial control over the broadcast.
The tribunal then weighed those findings against the rest of the relationship. ITV did not guarantee Fospero future work, she remained free to accept work from other clients, and Canal Street continued to operate as an established presenting business.
Her practical relationship with ITV also differed from that of permanent staff. She lacked the usual employment benefits, maintained her own client base and was not fully integrated into ITV’s organisation.
Taking all of these factors together, the tribunal allowed Canal Street’s appeal and found that IR35 did not apply.
What the Canal Street decision tells us
Canal Street is useful because several important findings went HMRC’s way and Fospero still succeeded.
Personal service was required, mutuality existed during each engagement, and ITV retained sufficient control. Those points did not settle the status question because the tribunal still had to consider the remaining terms and circumstances of the relationship.
The decision also drew a clear distinction between obligations during an individual booking and obligations between bookings. Fospero had binding commitments once she accepted work, but ITV did not have to keep offering assignments, and she did not have to keep accepting them.
The tribunal also considered her wider business activity. Later Court of Appeal authority in Atholl House has since clarified how evidence of other work should be handled, with the particular hypothetical contract remaining central to the status decision.
Canal Street was a First-tier Tribunal decision, so later tribunals are not bound by it. Its value lies in showing how personal service, mutuality and meaningful client control can all be present without the engagement necessarily falling inside IR35.
You can find Canal Street alongside the other major decisions in our guide to IR35 case law.
Judgment
Canal Street Productions Ltd v Revenue & Customs [2019] UKFTT 647 (TC), TC07422.