Former professional rugby union player turned Sky sports pundit, Stuart Barnes, has won a first-tier tax tribunal regarding his IR35 status, carrying £695,000 in tax liability.
Barnes’ limited company, S&L Barnes Limited, was under investigation for contracts held with Sky TV Limited, for the provision of punditry services between 2013 and 2019.
HMRC was of the view that Barnes should have been operating inside the IR35 legislation and, as a result, was demanding a total of £695,461.97 in tax. This was made up of £481,364.20 in PAYE and £214,097.77 in National Insurance Contributions (NICs).
However, Barnes successfully appealed at a first-tier tribunal held on 27-29th July 2022, with the verdict announced on 12th January 2023. The judge sided with Barnes, deeming the pundit not a disguised employee, and therefore belonging outside the IR35 legislation, due to being in ‘business on his own account’.
The case notes state: “The most compelling indicator is that the appellant’s contract with Sky was but one part of the brand, and contributed on average 60% of the appellant’s income, while over £150,000 on average would also be earned from other clients. Sky knew Barnes was in business on his own account and worked for other broadcasters; Sky welcomed that fact and wanted the world’s best commentator for the coverage.”
Dave Chaplin, CEO and founder of tax compliance firm IR35 Shield said:
“This the fourth Sky TV-based case to be heard at the First-tier tribunal, and the first of those to be upheld.
“It is notable that Mr Barnes had lots of other work, outside of his Sky TV work, and that HMRC had already accepted that his other work was not subject to IR35 rules.
“Judge Heidi Poon drew considerably on the Court of Appeal decision in Atholl House, which was not appealed by HMRC.
“In my experience, HMRC are relying too heavily on the contract, and not considering the “circumstances” enough. We now have two decisions based on the same contract, that are different. Because of that, it is likely HMRC will try and appeal this decision. Whether they are granted permission though we wait and see.”
Qdos CEO, Seb Maley, commented:
“This is a big victory – not just for Stuart Barnes, but for freelancers, contractors and the businesses engaging these workers.
“It’s another reminder to risk-averse businesses that contractors can be engaged outside the scope of the IR35 legislation. This win could prove crucial in making it crystal clear to firms that forcing all contractors onto the payroll is unnecessary, not to mention expensive.
“That Barnes was deemed genuinely self-employed based on being in business ‘on his own account’ is important, too. There are many factors to consider when determining IR35 status – something that all parties must bear in mind.
“The less said about HMRC the better. As the creators and enforcers of the IR35 legislation, the tax office is ramping up its activity but still struggles to recognise compliance more than two decades after the introduction of these rules.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.