IR35: Paradise lostby
Sky TV presenter Dave Clark has lost his appeal against HMRC determinations totalling £281,084, for tax and NIC due from his company under the IR35 rules.
Dave Clark is a well-known sports presenter and commentator, who first started working for British Sky Broadcasting Limited (now Sky) in July 1988.
It was at Sky’s request that he formed his company: A Little Piece of Paradise Ltd (LPPL), in June 2003, and started to offer his personal services through that company to Sky and to other customers. Before the incorporation of LPPL Clark invoiced Sky as a sole trader.
HMRC raised determinations for PAYE, class 1 and class 1A NIC amounting to £281,084 (excluding interest and penalties) covering the five years: 2013/14 to 2017/18, on the basis that Clark’s work for Sky fell under IR35.
The appeal against these determinations was heard by the FTT on 22 and 23 October 2020, but the case report (TC8300) has only recently been released.
The FTT considered the three written contracts (‘service agreements’) which were in place between Sky and LPPL over the five years covered by the HMRC determinations. It also considered what the terms of a hypothetical contract would be, if it was to describe the actual arrangement between Clark and Sky.
The service agreements were for fixed terms and stated that there was no intention to create an employment relationship. However, the payment arrangements pointed towards an employment relationship. LPPL was paid the same amount each month for Clark’s services, which wasn’t reduced for no-shows (eg sick leave), and neither was it increased for working extra hours.
The tribunal noted that “Clark was dependent upon Sky as the paymaster for the financial exploitation of his talents”.
The FTT found that there was mutuality of obligation (MOO) between Sky and Clark.
The LPPL legal team argued that there was actual substitution as Rodd Studd had presented in place of Clark on some occasions.
However, the FTT found that Studd was already a presenter for Sky. There was a separate engagement contract between Sky in relation to Studd, and LPPL was in no way contractually involved in Studd’s engagement for the ‘substitution.’ It was Sky’s decision as to whether the substitute was suitable, and the substitution was permitted to go ahead.
In conclusion there was no unfettered right to substitute at will to negate the obligation of personal performance by Clark in the contracts.
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