McCann Media Limited v The Commissioners for HMRC
[2024] UKUT 94 (TCC)
PD & MJ Limited v The Commissioners for HMRC
11 December 2023
[2024] UKFTT 38 (TC)
First-tier Tribunal
A football pundit worked for Sky through his own company. The tax office said he was really a Sky employee and owed more taxes. The court agreed. Even though he could choose his words, Sky controlled when and where he worked, making it an employment relationship for tax purposes.
Key Facts
- •Mr. Phil Thompson, sole director of PD & MJ Limited, provided punditry services to Sky UK Limited through his company.
- •HMRC assessed the company for PAYE and NIC for 2013/14 to 2017/18, totaling £294,306.68.
- •The dispute centers on whether IR35 (Intermediaries Legislation) applies, specifically whether Mr. Thompson would be considered an employee if he provided services directly to Sky.
- •Two contracts (2013 and 2015) governed the relationship, with substantially similar terms.
- •Mr. Thompson's work involved appearances on Soccer Saturday and mid-week shows, with Sky having editorial control but allowing Mr. Thompson significant autonomy in expressing his opinions.
- •Mr. Thompson later became a formal Sky employee in 2020, with his work remaining largely unchanged.
Legal Principles
Three-stage test for intermediaries legislation: 1) Identify actual contractual arrangements; 2) Ascertain terms of hypothetical contract (direct between worker and client); 3) Determine if hypothetical contract would be a contract of employment.
HMRC v Atholl House Productions Ltd [2022] EWCA Civ 501
Contractual interpretation involves considering the objective meaning of language, the contract as a whole, and the factual background known to the parties.
Wood v Capita Insurance Services Ltd [2017] AC 1173
Ready Mixed Concrete three-stage test for contract of employment: 1) Service agreement for remuneration; 2) Subject to employer's control; 3) Other provisions consistent with contract of service.
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497
Sufficient control for employment focuses on ultimate authority, not necessarily day-to-day control.
HMRC v Professional Game Match Officials Limited [2021] EWCA Civ 1370
Right of control, not how it's exercised, is key in determining employment status.
HMRC v Kickabout Productions Ltd [2022] EWCA Civ 502
Editorial control is a relevant factor in media contexts; control over 'what' is done is important, but control over 'how, where, and when' is also relevant.
Red White and Green Limited v HMRC [2023] UKUT 00083 (TCC)
No exhaustive list of elements exists to determine if a contract is a contract of employment; a multi-factorial approach is necessary considering all relevant factors known to both parties at contract formation.
Hall v Lorimer [1994] 1 WLR 209 and Atholl House
Written contracts may not be the exclusive record of agreements; tacit understandings and conduct can form part of the contractual terms.
S&L Barnes Limited v HMRC [2023] UKFTT 00042 (TC)
Outcomes
Appeal dismissed; Intermediaries Legislation applies.
The Tribunal found sufficient control by Sky in the hypothetical contract, including control over when, where, and the type of services provided, despite Mr. Thompson's autonomy in expressing opinions. The Tribunal rejected arguments for an implied right of refusal for Mr. Thompson and considered several factors (including the high percentage of income derived from Sky work) in reaching its decision.
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