Footballer loses £300k IR35 case at second try

Former footballer and Sky Sports pundit Phil Thompson has lost his appeal at the Upper Tribunal over long-running IR35 tax case

The case was first heard at the First Tier Tribunal in 2023, before Thompson through his personal services company, PD & MJ Limited, appealed the decision, disputing HMRC’s case that he owed income tax and National Insurance contributions (NICs) on his earnings when working for Sky Sports from 2014 to 2018. The dispute centred around the nature of the contract with the broadcaster.

HMRC issued a demand for £294,306 covering the four-year period, and the FTT ruled in the tax authority’s favour.

The tribunal found that Sky had control of Thompson’s output, determining the location for the filming and had considerable control over his work for the broadcaster.

At the Upper Tribunal, Thompson’s barrister Michael Firth KC argued that ‘the FTT’s conclusion was lacking in logic and unreasonable. The FTT essentially found that there was employment because there was a considerable control by Sky and Mr Thompson was associated with Soccer Saturday’.

In addition, Firth submitted that of the ‘factors the FTT purported to consider, very few are actually said to support employment and one is left with the appearance that the FTT reasoned that if there is control and nothing inconsistent with employment, that is employment, which is not the right test’.

To substantiate his argument, Firth cited several cases, Atholl House at the Court of Appeal and Basic Broadcasting Limited at the Upper Tribunal.

But the Upper Tribunal was not persuaded, noting: ‘We reject this ground of appeal challenging the evaluative exercise conducted by the FTT, which we have accepted contained no material errors of law and was well within a reasonable range of conclusions that could have been reached.’

As in the FTT ruling, the Upper Tribunal stressed that what happened in practice did not ‘detract from those contractual rights and there is no suggestion that there was any agreement that those contractual rights did not apply or were varied’.

Although Thompson’s work for Sky took up a relatively small amount of his time and was one method of capitalising on his status and character, the Sky contract provided 80% of his earnings.

Judge Rupert Jones stated: ‘This appeal must be dismissed because the grounds of appeal do not disclose a material error of law by the FTT in making its decision.

‘When the decision is read as a whole, there was no material error of law in the FTT’s conclusion that the intermediaries legislation applied to Sky’s engagements of Mr Thompson through the appellant because he would have been regarded as an employee under direct hypothetical contracts with Sky.’

As a result, the appeal was dismissed leaving little room for manoeuvre.

Dave Chaplin, CEO of IR35 Shield, said: ‘This ruling once again highlights that in IR35 and off-payroll cases, contracts are king. HMRC strongly argued that the contractual terms reflected the true working relationship, and the tribunal agreed.

‘The judgment reinforces that legally binding contractual terms cannot be set aside by courts in favour of perceived working realities.’

Visit BrAInbox today where you can find answers to questions like What does 'control' mean when working out employment status?

• London Chinese restaurant raided by Home Office
• Company fined £1.6m after preventable workplace death - could your business be at risk
• Chancellor brought 'back down to Earth' by 0.1% drop in growth
• Firm fined after fatal scaffolding failure - A preventable tragedy