11 June 2024

Justine Riccomini MSc FFTA AIPA Chartered MCIPD ChFCIPP, head of tax (employment and devolved taxes), the Institute of Chartered Accountants of Scotland (ICAS), explains how HM Revenue and Customs (HMRC) won its case on off payroll working against ex-footballer and commentator, Neil McCann

On 5 April 2024, after a six-month wait, we finally saw a decision (see https://ow.ly/NBrU50RSMqw) on the employment status case involving football pundit, Neil McCann, which was heard by the Upper Tribunal (UT) on 10 October 2023. Mr McCann works for Sky Sports and is a former professional footballer who played for Southampton, Rangers and Scotland. This case involved potential liabilities of around £200,000.

The case centered on off payroll working (IR35) and whether there was mutuality of obligation which must be present for an employment contract to exist between the engager and the worker. In IR35 cases, the court’s role is to determine whether in the absence of a limited company or other qualifying intermediary, the hypothetical contract between worker and engager would have been one of employment or self-employment.

Mr McCann appealed to the UT because the First-tier Tribunal (FTT) concluded that his contract was one of employment, and due to the presence of an intermediary, he was bound by the IR35 legislation of Chapter 8 of the Income Tax (Earnings and Pensions) Act 2003 (see https://ow.ly/Al9y50RSMNw).


The appeal

In cases like this, it is important to examine the fact pattern, and Mr McCann’s case demonstrated that he worked in return for an annual fee. This appears to have been paid monthly to him, like a salary, and the work he carried out was almost entirely for Sky Sports. Unusually for a TV personality, he didn’t seem to have been paid by appearance. Therefore, it was irrelevant whether he worked once a week or six times – the payment was the same. When Mr McCann took on a caretaker / manager role for a few weeks and didn’t appear on TV in his pundit role, he was still paid by Sky in the usual manner.

In addition to the payment pattern, it appears that a substantial amount of editorial control was exerted over Mr McCann. Other than having the freedom as an expert to speak in technical terms, the editing and overall production was under the control of Sky – unlike in the case of Scottish TV presenter and journalist, Kaye Adams (see https://ow.ly/WeMk50RSNg2).


The UT’s decision

The UT dismissed any reference by the appellant to the so-called ‘PGMOL’ case (see https://ow.ly/CkCb50RSNIA), which is currently awaiting a Supreme Court decision. The decision of the Supreme Court could either ratify the lower court’s decision or overturn it.

The UT upheld the FTT decision and found in favour of HMRC, having used the Ready Mixed Concrete case (see https://ow.ly/ZPOF50RSO4w) once again as a benchmark.


Outcomes and updates

It isn’t particularly surprising that HMRC has been awarded the spoils in this case, due to the payment pattern. It will be interesting to see what the outcome of the PGMOL case is and we will cover updates on this once they have been released. As ever, IR35 and off payroll working are extremely complex in nature, so guidance and advice on these matters should be sought from suitably qualified experts. 


This article featured in the July - August 2024 issue of Professional.