HMRC wins Stuart Barnes tax case over Sky Sports job

HMRC - the UK's revenue authority - have overturned a successful appeal made by former England flyhalf Stuart Barnes over his employment at Sky Sports.

The case centred around whether or not Barnes was an employee of Sky Sports or if he was working as part of his own business - S&L Barnes Ltd - for Sky.

Last year Barnes won a first-tier tax tribunal regarding his IR35 status which saw him avoid a £695,000 tax liability, pertaining to his work for Sky Sports between 2013 and 2019.

Barnes had previously been notified by HMRC that he should have been operating within IR35 legislation and consequently owed £695,461.97 in tax, made up of £481,364.20 in PAYE and £214,097.77 in National Insurance contributions.

HMRC have have now overturned the decision at the Upper Tribunal, overturning the first-tier tribunal's decision.

CEO of IR35 Shield Dave Chaplin - who attended the upper-tier hearing in person - said: "The Stuart Barnes case was a close call that could have gone either way. It's crucial to note that HMRC's first ground of appeal failed, with the Upper Tribunal upholding the First-Tier Tribunal's decision regarding the variation of terms related to Sky's 'right of first call'.

"However, HMRC's second ground of appeal, which was more controversial, did succeed. This ground focused on how the First-Tier Tribunal approached the third stage of the Ready Mixed Concrete test and which factors it considered relevant to go into the mix for the full evaluation. The surprising element was that the UT chose to interfere with the evaluative nature of a multi-factorial decision by a First-tier tribunal.

"Both parties requested at the hearing that if an error of law was found, they preferred the Upper Tribunal to remake the decision rather than remit it back to the First-Tier Tribunal. Had the case been remitted, it's possible that the First-Tier Tribunal might have drawn a different conclusion – but it would have been a 50/50 chance.

"This ruling now means that none of the cases involving individuals providing services to Sky TV have succeeded at the tax tribunal.

"This case underscores the need for freelancers and their clients to ensure that their contracts and working practices accurately reflect the true nature of their relationship."