Former Rangers and Scotland icon, Neil McCann, has lost a battle with the tax man over his work for Sky Sports. The ex-footballer is reported to owe HMRC £190,000 as a result of being regarded for income tax purposes as an employee.


Meanwhile, another recent high-profile case saw the tv and radio presenter, Adrian Chiles, have his appeal accepted. This article will look at both cases and see how they compare as well as why only McCann was found to have fallen foul of the rules.


While Chiles had his appeal accepted, both cases offer a warning for those who see themselves as self-employed but could be regarded by HMRC as being employed by a particular company under the off-payroll working IR35 tax rules.


But first, what is an IR35 contract?

IR35 is the name given to the UK’s anti-avoidance tax legislation designed to tax ‘disguised’ employment at a rate similar to employment, who pay income tax and make national insurance contributions. In contrast, disguised employees only pay corporate taxes. Here, “disguised employees” means workers who receive payments from a client via an intermediary, i.e., their own company, and whose relationship with their client would equate to being an employee of that client if they were only paid directly, instead of being paid via their own company.


To put it simply, an IR35 case can be launched when someone is using their own company as a barrier between themselves and a client, in order to pay less tax on their earnings paid by that client.


According to HMRC, if the rules apply, “Income Tax and employee National Insurance contributions must be deducted from fees and paid to HMRC. In addition, employer National Insurance contributions and Apprenticeship Levy, if applicable, must be paid to HMRC by the person who pays the worker’s intermediary.”



From April 2021, the rules have changed so that according to HMRC, “all public authorities and medium and large-sized clients outside the public sector are responsible for deciding if the rules apply. If a worker provides services to a small client outside the public sector, the worker’s intermediary is responsible for deciding the worker’s employment status and if the rules apply.” The obligation is therefore on the employer to decide whether the rules apply to workers who provide their services to the employer through an intermediary. However, workers should be mindful of tax avoidance schemes.


McCann Media vs HMRC

In contrast there was no evidence of McCann providing services to or being engaged by anyone other than McCann Media Limited (MML) during the tax years in issue. McCann had his Personal Services Company appeal rejected by the First-Tier Tax tribunal after HMRC concluded that the arrangement between McCann and Sky for his punditry and co-commentating services were an employment arrangement for IR35 purposes.



There were three main reasons as to why HMRC determined that McCann’s contract with Sky was one of employment:


1. The contracts between MML and Sky largely reflected the agreement between the two parties, despite the 6-week stint that McCann had as interim manager of Dundee FC.


2. Sky had final editorial control over any products that contained McCann’s contributions.
• They also had the right to determine when and where the work was done, as well as the role that McCann would perform.
• He was restricted in his use of social media and could not promote any competitor of Sky, nor be involved in the provision of services to any TV, radio or other media organisation without the written consent of Sky


3. Finally, when considering whether the hypothetical contract which determines the outcome of an IR35 case was one of employment, the First Tier Tribunal noted there was a lack of an absolute right for Sky to determine the dates on which McCann was to attend and act as a pundit. Nevertheless, this did not negate the right level of mutuality of obligations. Sky still had a level of control over McCann which meant that the hypothetical contract was indeed one of employment between Sky and McCann. They also concluded that he could not be in business on his own account under the terms of the hypothetical contract, with McCann entitled to an annual fee from Sky.


As a result of these findings, McCann’s appeal was therefore dismissed by the First-Tier Tribunal.


Basic Broadcasting vs HMRC

Let’s now take a look at a high-profile figure who managed to make a successful appeal against the IR35 rules. Adrian Chiles is a well-known sporting presenter who has presented Match of the Day 2 on the BBC, as well as World Cup coverage on ITV. It is his work for these channels which was the basis of the claim by HMRC that he owed them £1.7m.



While McCann has been forced to pay the tax man £190k, Chiles’ IR35 appeal (Basic Broadcasting vs HMRC) was allowed after HMRC had claimed £1.7m against the presenter. The appeal by Chiles was allowed on the basis that through his personal service company (PSC), Chiles was determined to be self-employed, rather than employed by BBC and ITV. Furthermore, Chiles had employed an agent, which the FTT saw as indicative of the fact that Chiles being in business on his own account and indicated self-employment.


Chiles was also found to have multiple contracts and sources of income, whereas there was no evidence of McCann providing services to or being engaged by anyone else other than McCann Media Limited during the tax years in issue.


Tax and legal experts have since commented that the outcome of the case highlights HMRC’s patchy record when it comes to case relating to IR35 legislation, having only won 7 out of 20 cases since 2010 according to Contractor Calculator, a website for freelancers.


What can we learn from McCann’s case?

Where the person is economically dependent on a broadcaster, and where the broadcaster has the right to restrict the individual from participating in other activities, such as presenting for rival broadcasters, the presenter cannot be considered to be in charge of business on his or her own account. It’s also worth bearing in mind that McCann’s case took place prior to Adrian Chile’s IR35 case, where Chiles was found to be in business on his own account. Any worker who provides their client services through an intermediary, but would be considered an employee if contracted directly should be mindful of the IR35 rules.


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