A tax tribunal today ruled in favour of BBC presenter Lorraine Kelly over her role as a performer on ITV. The HMRC had claimed Kelly was an employee and not a freelancer and said she owed £1.2 million in taxes and national insurance contributions.

Kelly received the national insurance and income tax bill from the HMRC in 2016 but she said she was a freelancer and appealed against the tax authority. The judge ruled that she was not employed by ITV but performs as her TV persona.

According to The BBC, the case centres on a contract that Kelly signed in 2012 - through a company she runs with her husband - to present the show ‘Lorraine’, as well as her former show ‘Daybreak’ which ended in 2014.

HMRC brought the case against Kelly under IR35 legislation which aims to crack down on personal service companies, which she used to manage her earnings.

In 2016, she was sent a bill of nearly £900,000 in income tax and more than £300,000 in national insurance contributions.

According to The Telegraph, the HMRC argued that Kelly had wrongly claimed her agent’s fees as tax deductible. The deduction is permitted only for “theatrical performers”, classed as actors, singers, musicians, dancers or theatrical artists.

However, Kelly’s lawyers successfully argued that she is an “entertainer” and therefore should be included in the category.

The tribunal found that Kelly did not receive staff benefits such as holiday or sick pay and was allowed to carry out other work.

Judge Jennifer Dean then agreed with Kelly’s lawyers that she could be classified as a "theatrical artist", which would mean any payments to an agent would be allowed as a tax-deductible expense.

In the ruling, the judge ruled that the relationship that Kelly had with ITV "was a contract for services and not that of employer and employee".

Judge Dean said, "We did not accept that Kelly simply appeared as herself - we were satisfied that Kelly presents a persona of herself, she presents herself as a brand and that is the brand ITV sought when engaging her. We should make clear we do not doubt that Ms Kelly is an entertaining lady but the point is that for the time  Kelly is contracted to perform live on air she is public 'Lorraine Kelly'.

A spokesman for the HMRC said the tax office was “disappointed” with the ruling.

“We will carefully consider the outcome of the tribunal before deciding whether to appeal," the HMRC spokesman said.

Dave Chaplin, CEO and founder of contracting authority ContractorCalculator, commented on the ruling, “The Intermediaries Legislation, commonly called IR35, was created in April 2000 by HMRC to crackdown on the ideological invention by HMRC of ‘deemed employees’.  HMRC must stop harassing the genuinely self-employed with this ridiculous piece of legislation and this case again serves to highlight HMRC’s complete lack of understanding of employment status.”

Julia Kermode, Chief Executive of The Freelancer & Contractor Services Association, also commented, “Lorraine Kelly is one more star working on a freelance basis who has hit the headlines and the story once again serves to highlight the complexity of IR35 legislation. It is essential that HMRC does not penalise everyone working through PSCs in a blanket fashion as they bring much-needed flexibility to both the freelancer and businesses that engage them on a short-term basis.”