HMRC bounces back from defeat in Atholl House case against Phil Thompson, ex-professional player and TV pundit
Former footballer and Sky Sports commentator, Phil Thompson, has lost an IR35 case which carried almost £300,000 in tax liability.
Thompson had provided his services to Sky Sports in a freelance capacity, over two stints and across several contracts held with the broadcaster, as well during as a brief period of employment.
His failed appeal follows a 2019 ruling and leaves Thompson facing a total tax liability of £294,306.68 in Income Tax and National Insurance Contributions (NICs).
The case was decided by Judge Richard Chapman QC at a First-Tier Tax Tribunal. The ruling was reached on 13 December, following a two-day hearing in March and further submissions in April.
Thompson is one of many freelance presenters targeted by HMRC for alleged IR35 non-compliance, a list which also includes Gary Lineker, Eamonn Holmes and Kaye Adams. This result in particular contrasts with HMRC’s defeat against Kaye Adams in November.
One employment status expert has questioned how businesses can be expected to compliantly manage the rules when the two cases – which shared many similarities – have reached entirely different conclusions.
How the case unfolded
Thompson had acted as a pundit on the weekly Sky Sports show, Soccer Saturday, for 20 years. From 2013 onwards, he provided his services via his limited company, PD & MJ Ltd.
HMRC argued that, for contracts held with Sky between 2013/14 and 2017/8, Thompson had effectively operated as an employee – and should have been taxed as such. Thompson contested this, though the tribunal sided with HMRC both in 2019 and again this year.
Several factors led to this conclusion. The tribunal found that Sky had a “considerable” level of control over Thompson; this was true contractually and in terms of working practices.
The tribunal found that “Sky’s contractual right to require Mr Thompson’s performance of the services at a location of their choosing is consistent with an employment relationship”. Thompson also performed his services “on regular occasions, at regular locations”.
This level of control was reinforced by the inclusion of a non-compete clause in the contract, giving Sky the right to “prevent Mr Thompson from working for competitors”.
Mutuality of Obligation was also found to exist, as there was “no implied term” in the contract which gave Thompson the “right to refuse any request by Sky”.
‘No consistency’ in IR35 application
Rebecca Seeley Harris, director and founder of Re:Legal Consulting, has specialised in employment status law since the introduction of the IR35 legislation. Commenting on the Thompson case, Seeley Harris said it was “not as finely balanced as the Kaye Adams case”.
“We have had two contrasting cases on TV presenters, with two different outcomes concerning IR35. There does not appear to be any consistency in the method or the factors used to determine these cases”, she added.
“One person more famous than the other wins on the basis of being a brand. I’m not sure how these cases help businesses in the real world determine whether they can legitimately engage someone under the off-payroll working rules.
“Mr Thompson worked mainly for Sky, and the public perception was that he was a Sky pundit on Soccer Saturday. He didn’t have other engagements and Sky had a lot of control”, she said.
Thompson has 56 days to appeal the ruling, but facing “a hefty tax bill at nearly £300,000” and with his company in liquidation, Seely Harris concluded that “it remains to be seen if he will appeal”.
Terrible decision.