The First-tier Tribunal has judged the case of S & L Barnes Ltd v HMRC [2023] UKFTT 42 (TC).
The tribunal upheld the company’s appeal that, in performing work as a rugby commentator and pundit for Sky, Mr Barnes, an ex-player and respected expert, was not subject to the IR35 legislation.
The tribunal considered the three employment tests in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 i.e.:
- The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.
- He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.
- The other provisions of the contract are consistent with its being a contract of services.
It was held that the first two tests were met, so the case hinged on whether the contractual arrangements were consistent with them being a “contract of employment”. They were held not to be for the following reasons:
- Mr Barnes’ input as “second voice” to the commentary was of great value to Sky and the viewers. His annual fee did not stipulate a minimum number of days of service, only a maximum. As such over the period under consideration his actual working days varied between 90 and 120 days a year, but this did not lead to any adjustment to the agreed annual fee suggesting that it was not a salary but a block fee for the exclusive rights for his services.
- Mr Barnes was free to reproduce his opinions on matches that he had commentated on for Sky in other media and did so on a regular basis, including his weekly Sunday Times column, demonstrating that he retained the intellectual property to his work.
- Mr Barnes had much latitude in stating his availability to cover live matches.
- Outside of his commentator role Mr Barnes would often be the subject of interviews on Sky Sports News discussing various matches. It was considered unlikely that a broadcaster would interview its own employee and the frequency of his appearances demonstrated his independent reputation as a rugby union expert, well-known and well-regarded outside Sky TV indicating that the contractual relationship in real terms was not that of a master-servant relationship in a contract of employment.
- Outside of his Sky commitments it was clear that Mr Barnes was in business on his own account competing with other pundits for work.
- Mr Barnes actively studied games and performed research in his own time which he applied to all of his various activities. The fruits of this were not exclusive to his work for Sky.
- Mr Barnes efficiently used his time providing services in parallel to a number of organisations demonstrating that he was profiting from the sound management of his business, consistent with self-employment.
- Mr Barnes’ income derived from his reputation as a world expert on rugby and as such every time he spoke he ran the risk that his comments could damage his reputation and as such compromise his future earnings potential. Risk is consistent with self-employment.
- Mr Barnes was not financially dependent on Sky. While it was his highest source of income, his income from the Times/Sunday Times was significant and he had turned down an offer to enter into a new contract with Sky. There were significant demands for his services from various sources, so much so that he had no need of an agent.
It was noted by the tribunal that HMRC had agreed that Mr Barnes’ regular work for the Times/Sunday Times via his company was not caught by IR35, but that this decision had no bearing on the matter under consideration.
HMRC had sought to make comparisons between Mr Barnes and his regular co-commentator who was an employee of Sky. The tribunal felt that this was of no consequence as each case turns on its own facts.
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08697.pdf
Related content from Claritax Books
In Employment Status, author David Kirk guides the reader through the maze of apparently contradictory case law on this topic. The book includes coverage of IR35 issues, and also of topics of officers, agency workers, personal services companies and special occupations.
