IR35 Tribunal

IR35 Tribunal Verdict: Sky Pundit Phil Thompson Loses Case vs HMRC

Footballer turned pundit, Phil Thompson, is the latest victim of HMRC’s agenda against media personalities. Former professional footballer and Sky Sports pundit, Phil Thompson, has lost his appeal in an IR35 tribunal that carried nearly £300,000 in tax liability.

You might be forgiven in thinking that Sky has seriously upset HMRC, because yet another presenter has been the subject of an IR35 tribunal, and, unlike previous cases on this occasion HMRC have come out on top.

The ruling was reached at a First-Tier Tax Tribunal by IR35 tribunal judge Richard Chapman QC on 11 December, following a two-day hearing in March. Thompson has 56 days, or until Monday 5 February, to appeal.

It follows an earlier ruling, from 2019, which also went against the ex-Liverpool footballer. The result is just the latest development in a year which has seen HMRC ramp up IR35 enforcement activity. It’s also yet another reminder that demonstrating compliance remains a priority for businesses and contractors alike going into 2024.

Following the end of his playing career, Thompson turned to TV, becoming a mainstay on the Sky Sports programme, Soccer Saturday, between 1994-1998 and again from 2004-2020.

From 2013 onwards, he contracted with Sky through his limited company, PJ & MD Ltd. He was soon under investigation by HMRC over a total liability of £294,306.68 accrued over contracts held between 2013/14 and 2017/18.

He is just one of many media personalities targeted by HMRC for perceived non-compliance, including others engaged by Sky Sports, such as the commentator Alan Parry. In this case, the tribunal found that Thompson had operated as an employee, rather than as a self-employed individual.

IR35 Tribunal Examines the Contract:

As EEBS MD Nick Pilgrim explains, “There are a couple of interesting points of focus in the case; although Mr Thompson did not wear an earpiece and thus receive editorial direction in what he said on screen, because Sky had first call on his services, and exerted significant contractual control over a number of different areas of the relationship, the tribunal found that this control was more reflective of an employment relationship, rather than a self-employed engagement

And here’s the kicker: From 2020 Mr Thompson became a full-time employee of sky, and confirmed at tribunal that there was virtually no difference in the relationship after this change.

So, as we might have mentioned before, if it quacks like a duck, waddles like a duck and swims on a pond then, well it’s probably a duck! – and in this relationship the degree of control meant that Mr Thompson looked more like an employee than a self-employed sub-contractor – which he subsequently confirmed after becoming an employee – so it’s little wonder that the tribunal found in favour of HMRC!!”

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The tribunal examined the contracts held between Thompson and Sky and identified Control – a hallmark of an inside IR35 engagement.

This was partly because of a comprehensive non-compete clause. If Thompson wanted to provide his services to other businesses – particularly “where such services are the same as or similar” to those provided to Sky – he needed written permission from the Head of Sky Sports.

In short, Sky had “control of Mr. Thompson’s activities in appropriate circumstances… to preserve their exclusive exploitation of his services”. The “exclusive” bit is important; this is what made the engagement more like employment than self-employment, according to the tribunal.

As such, there was a “sufficient framework of control” throughout the contract overall, too – including Sky’s “contractual right to decide” where and when the work happened.

Contact EEBS for a free audit of your contractual arrangements.

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Nick Pilgrim

M.D. | CIS Payroll Expert
01245 493832

Nick loves nothing more than chewing the fat over CIS payroll queries – actually that’s not strictly true; he likes playing golf and driving round Europe, but pick up the phone to him anyway!

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