Many media personalities who provide their services via their own private companies have, in tax terms, expensively fallen foul of the so-called IR35 legislation. However, in one case, a Rugby Union commentator's company succeeded in overturning six-figure HM Revenue and Customs (HMRC) demands.
The man engaged in lucrative work as a media pundit after enjoying a stellar career on the field of play. Via his company, his services were provided to a broadcaster. Citing IR35, HMRC took the view was that he was to all intents and purposes the broadcaster's employee. On that basis, the company was assessed for almost £700,000 in Income Tax and National Insurance contributions.
Ruling on the company's challenge to those demands, the First-tier Tribunal (FTT) found that there was a mutuality of obligation between the man and the broadcaster. He was obliged to perform his services personally and the broadcaster was required to pay him a fixed annual fee. The broadcaster also had a sufficient level of control over how he went about his work to found an employment relationship.
Upholding the appeal, however, the FTT drew a distinction between the man's role as a commentator – providing analytical insights and 'second voice' punditry during matches – and that of a programme presenter. The broadcaster did not stipulate a minimum number of days on which he had to work, only a maximum, and his annual fee did not resemble a salary. It was more in the nature of a block fee paid for the exclusive right to have first call on his services for a specified period.
There was no embargo on him reproducing in other media outlets opinions he had previously expressed during one of the broadcaster's live shows. He took a personal reputational risk every time he appeared on air and he bore editorial responsibility for every word falling from his lips.
His work schedule was apparently set by a process of gentlemanly consensus. The broadcaster was reasonable in its demands on his time and, in the event of clashes, granted him reasonable leeway to refuse engagements. Although the company derived about 60 per cent of its turnover from the broadcaster during the relevant period, the FTT noted that the man also wrote popular newspaper columns and provided his services to other broadcasters. Overall, the FTT did not view his relationship with the broadcaster as one of employment.