Sky Sports pundit wins appeal over £695k tax bill for IR35 breach 

The former professional rugby player turned Sky Sports pundit had been facing a £695,000 tax bill for breach of IR35 rules.

The case concerned services provided by Barnes the 1980s and early 1990s in which he wrote for various newspapers and magazines including the Daily Telegraph, the Times, and Rugby World Magazine. He also worked as a pundit with Sky Sports from 1994 to 2019.

His appeal concerned the contracts between 6 April 2013 and 5 April 2019 when British Sky Broadcasting Limited, which changed its name to Sky TV Limited in February 2015, engaged Mr Barnes.

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Barnes worked for Sky through his limited company S&L Barnes Limited, and it was HMRC’s claim that he should have been operating inside IR35 legislation.

IR35 rules were brought in to crack down on “disguised employees” working on a contract basis in order to pay less tax.

The court said: “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.”

Dave Chaplin, CEO and founder of tax compliance firm IR35 Shield said: “This the fourth Sky TV-based case to be heard at the First-tier tribunal, and the first of those to be upheld.

“It is notable that Mr Barnes had lots of other work, outside of his Sky TV work, and that HMRC had already accepted that his other work was not subject to IR35 rules.

“Judge Heidi Poon drew considerably on the Court of Appeal decision in Atholl House, which was not appealed by HMRC.

“In my experience, HMRC are relying too heavily on the contract, and not considering the ’circumstances’ enough. We now have two decisions based on the same contract, that are different. Because of that, it is likely HMRC will try and appeal this decision. Whether they are granted permission though we wait and see.

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Judge Poon said: “I have rejected HMRC’s submission that Mr Barnes’ contractual relationship with Sky was of employment based on the parallels drawn between Mr Miles Harrison (another commentator for Sky Sports) and Mr Barnes, including reliance on Mr Barnes’ oral evidence of Mr Harrison’s coverage for other broadcasters.

"While not doubting the reliability of Mr Barnes’ evidence, I do not find it appropriate to make any findings of fact in relation to what Mr Harrison did for other broadcasters, and under what basis Sky and Mr Harrison on his other broadcasting engagements. Nor do I find it at all a sound or relevant basis to found Mr Barnes’ contractual relationship with Sky by mapping onto how Mr Harrison had been contracted by Sky; each case turns on its own fact.

There have been many of high profile IR35 tax cases recently, the most notable being that of Lorraine Kelly in 2019.

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In July, Sky Sports presenter Alan Parry lost his appeal with HMRC leaving him with a £356,000 tax bill.

Last year, former Sky Sports TV presenter Dave Clark lost his IR35 appeal against HMRC, leaving him with a £281,000 tax bill.