Sky Sports TV Presenter was employed under hypothetical contract and IR35

The First-tier Tribunal (FTT) has held that the IR35 intermediaries rules applied to a Dave Clark a now retired sports presenter providing services to Sky through a personal services company.

The individual provided live darts and boxing coverage. Under the hypothetical contract envisaged by section 49(1)(c) of ITEPA 2003 (and regulation 3, Social Security Contributions (Intermediaries) Regulations 2000 (2000/727)), the tribunal concluded that the individual would have been an employee of Sky.

The tribunal considered that:

There was sufficient mutuality of obligation under the terms of the hypothetical contract (which should be inferred both from the documents and from the conduct of the parties). Despite some suggestion in the documents (and the appellant’s assertion) that the annual fee was calibrated by reference to the number of days actually worked, the same monthly fee had been paid throughout and the existence of a termination clause was indicative of mutuality of obligation.
Sky had a sufficient degree of control over the individual. Sky had a “first call” on the individual’s time. Whilst the timing and location of the darts events was decided by the Professional Darts Corporation, Sky chose which events to cover and as a result had control over the time and place of the individual’s work. Although the individual had a high degree of autonomy in presenting, Sky controlled what he presented.
The other provisions of the contract were consistent with an employment relationship. In particular, the actual contract with Sky only allowed a substitute with Sky’s consent. When a substitute was brought in, Sky agreed to pay the substitute directly. The FTT concluded that the hypothetical contract between Sky and the individual would not have included a substitution right.

This decision is a reminder of the importance of the conduct of the parties when assessing the terms of the hypothetical contract. In addition, the FTT’s comment, that a company-wide review of arrangements with third party contractors, triggered by the extension of the off-payroll working rules (Chapter 10, Part 2, ITEPA 2003), may be a concession that prior arrangements would have fallen foul of the IR35 legislation, may be worrisome.

The overall quantum under appeal was £281,084.48.

IR35 and off-payroll working rules can be tricky. If you’re unsure and want expert advice, get in touch.

Case: Little Piece of Paradise Ltd v HMRC [2021] UKFTT 369 (TC) (18 October 2021) (Judge Poon and Simon Bird).

Source: Practical Law

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