Tribunal rules IR35 did not apply to co-commentor role

The First Tier Tribunal has found that Stuart Barnes, the ex-Bath and England Rugby player who was engaged by Sky Sports as a TV rugby co-commentator and lead analyst, was not within the IR35 legislation when providing his services to Sky through his personal service company S & L Barnes Ltd (SLB).

The case itself carried a very significant potential liability of nearly £700K, coupled with the daunting prospect of having already seen HMRC successfully challenge other Sky Sports presenters using similar basic contractual agreements between Sky and those presenters’ companies as were used with Barnes.

In addition to his work with Sky, Mr Barnes also provided his services to a range of media organisations, including writing for the Times Newspaper, the Sunday Times, Rugby World magazine and working for other broadcasters.

The Tribunal, taking into account the Atholl House Court of Appeal case, first looked to establish the terms of the hypothetical contract which it decided must be drawn from all the circumstances in which the services were provided, using the terms of the actual contract as a starting point.

Once the terms of the hypothetical contract were established, the next process was to determine whether it was a contract of employment or self-employment by applying the 3-stage test as set out in the seminal case of Ready Mixed Concrete (1968). These tests comprise the following:

• Is there mutuality of obligation;
• Is there sufficient control; and
• Are the other provisions of the contract consistent or inconsistent with a contract of employment.

Whilst SLB conceded that the first two tests of Ready Mixed Concrete were met, focusing instead its arguments on the third test, the Tribunal still looked to establish for itself the position of the first two tests before moving onto the third test.

In doing so, the Tribunal found that there was sufficient mutuality and control to meet the first two parts of the Ready Mix Concrete tests. Crucially, however, when it came to the question of other provisions and factors, it was found that the relevant contracts could not be considered contracts of employment, resulting in the Tribunal reaching the conclusion that Barnes was indeed considered to be in business on his own account.

The case notes state: “The most compelling indicator is that the appellant’s contract with Sky was but one part of the brand, and contributed on average 60% of the appellant’s income, while over £150,000 on average would also be earned from other clients. Sky knew Barnes was in business on his own account and worked for other broadcasters; Sky welcomed that fact and wanted the world’s best commentator for the coverage.” Indeed, it was notable that Mr Barnes had lots of other work outside of his Sky TV role, and that HMRC had already accepted that his other work was not subject to IR35 rules.

This is an interesting case because it has some significant similarities with other successful contractor challenges, such as Adrian Chiles of Basic Broadcasting Ltd, where the Tribunal found in favour of the appellant because, ultimately, there was sufficient evidence to support the individual being in ‘business on their own account’.

The takeaway from this case, and other successful ones like it, is that the providers of the services are unique in their status and provide a brand rather than just labour.