ITV Services Ltd v Revenue And Customs

For National Insurance purposes, an actor’s status under paragraph 5A is determined prospectively from the contract at the outset of the engagement. Remuneration includes salary if any contractual payment satisfies the four cumulative statutory conditions. A contingent entitlement can suffice. Specified or defined irregular payment intervals may satisfy the payment-timing condition. In applying the work-time condition, incorporated collective agreements may preserve daily production or attendance payments. A tailored all-inclusive fee may instead replace such payments, but other contractual entitlements can independently establish salary.

The First-tier Tribunal dismissed ITV’s appeals against determinations imposing secondary Class 1 National Insurance contributions for actors engaged under various contracts. It held that actors under the All Rights Contract were not employed earners, but that actors under the other contracts were. The Upper Tribunal dismissed ITV’s appeal in [2012] UKUT 47 (TCC). ITV appealed to the Court of Appeal, challenging the interpretation and application of paragraph 5A of the Categorisation Regulations, particularly the meaning of salary and work.

1. The Court of Appeal dismissed the appeal. Lord Justice Rimer gave the leading judgment. Sir Stanley Burnton and Sir James Munby agreed with dismissal on the collective-agreement basis and reserved their opinions on the precise meaning of “work” in subparagraph (d).

2. The inquiry under paragraph 5A of the Social Security (Categorisation of Earners) Regulations 1978 is forward-looking. The actor’s status is determined from the contractual terms at the outset, not by the payments ultimately made. The four conditions defining salary are cumulative. A payment need not be made after the services are performed, and “specific period or interval” includes pre-defined irregular intervals.

3. Rimer LJ considered that a literal reading of subparagraph (d) would be impractical. A payment may satisfy it where at least part of the remuneration is identifiable as a daily, weekly or other periodical rate for work to be done. It does not matter that the actor later works for a shorter period or is not required to work on a particular day. On Rimer LJ’s analysis, mere first-call availability was distinct from performing work, so an all-inclusive fee for availability, performance and intellectual-property rights was not itself salary.

4. A contingent contractual entitlement to a daily or weekly payment for additional work is nevertheless a payment by way of salary. The contingency does not prevent the contract from including salary when the status inquiry is made.

5. Where a contract incorporated a collective agreement, its production-day or attendance-day provisions could constitute salary. An all-inclusive fee stated to include daily payments under the collective agreement was treated as including them. Conversely, a tailored global payment could replace the collective agreement’s daily-rate obligation where the contract clearly did so and the replacement was not calculated by reference to identifiable days worked.

6. Applying those principles, the Bespoke Agreement included salary through its overage entitlement and incorporated production-day payments. The various Equity and PACT agreements included salary through contingent second-call entitlements or daily payments. The All Rights Contract did not include salary, and the walk-on daily rate did. The actors under the disputed contracts were therefore employed earners and ITV was liable for the secondary contributions.

• Court of Appeal (Civil Division): Appeal dismissed on 23 July 2013.
• Upper Tribunal (Tax and Chancery Chamber): ITV’s appeal from the First-tier Tribunal was dismissed in [2012] UKUT 47 (TCC).
• First-tier Tribunal (Tax): Appeals against HMRC’s determinations were dismissed, subject to its conclusion that actors engaged under the All Rights Contract were not employed earners.