The Commissioners for HMRC v S & L Barnes Limited
[2024] UKUT 262 (TCC)
McCann Media Limited v The Commissioners for HMRC
5 April 2024
[2024] UKUT 94 (TCC)
Upper Tribunal
A TV pundit worked for Sky through his own company. The tax man said he was really an employee, not self-employed. The courts agreed, saying even though he also worked elsewhere briefly, his main deal with Sky was like an employment contract.
Key Facts
- •McCann Media Limited (MML), Neil McCann's personal service company, provided his services to British Sky Broadcasting Ltd (Sky).
- •HMRC issued determinations and notices regarding PAYE and NICs for tax years 13/14-17/18, arguing that the Intermediaries Legislation (IR35) applied.
- •The FTT dismissed MML's appeal, finding that a hypothetical contract between McCann and Sky would be a contract of employment.
- •MML appealed to the Upper Tribunal (UT), challenging the FTT's application of the three-stage test for determining the applicability of IR35 and its analysis of mutuality of obligation and other contractual terms.
- •A key dispute centered on whether McCann's engagement with Dundee FC during the relevant period affected the mutuality of obligation in his relationship with Sky.
Legal Principles
Intermediaries Legislation (IR35) applies if a hypothetical contract between the worker and the client would be a contract of employment.
Sections 48-61 of ITEPA 2003 and the Social Security Contributions (Intermediaries) Regulations 2000
The three-stage test in *Kickabout* and *Atholl CA* is used to determine the applicability of IR35: (1) ascertain the terms of the actual contract, (2) ascertain the terms of the hypothetical contract, and (3) determine whether the hypothetical contract would be a contract of employment.
*Revenue & Customs Commissioners v Kickabout Productions Ltd* [2020] UKUT 216 (TCC) and *Revenue and Customs Comrs v Atholl House Productions Ltd* [2022] EWCA Civ 501
A contract of service (employment) exists if three conditions are met (*Ready Mixed Concrete*): (i) mutuality of obligation, (ii) control, and (iii) other circumstances consistent with employment.
*Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance* [1968] QB 497
An 'irreducible minimum' of mutuality of obligation and control is required for a contract of employment.
*Atholl CA*
Outcomes
The UT dismissed MML's appeal.
The UT found no error of law in the FTT's decision. The FTT correctly applied the three-stage test, considering the evidence regarding McCann's engagement with Dundee FC and the terms of the contracts. The UT held that the FTT's findings on mutuality of obligation, the 'other circumstances' condition in *Ready Mixed Concrete*, and the application of the three-stage test were supported by the evidence and not an error of law.