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Former Liverpool Football Player and Sky Sports Pundit Phil Thompson Loses IR35 Case

Phil Thompson commentating on The Paddy Power Shop show
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Sky Sports pundit, Phil Thompson, loses £300,000 IR35 case

In a recent tax case ruling, it has been determined that former Liverpool football player and Sky Sports pundit, Phil Thompson, has lost his IR35 case. As a result, he will be required to pay approximately £300,000 worth of tax liability.

IR35 is a tax deduction that has been in place in the United Kingdom since 2000. The goal of IR35 is to ensure that companies that contract out work to individuals are paying the correct amount of tax. However, the interpretation of IR35 and its application to specific cases have been a source of debate.

Thompson was a pundit on Soccer Saturday and other Sky Sports programmes, with HMRC taking the view that he belonged inside IR35 on these engagements (reportedly held between 2014 and 2018) and therefore owed £294,306 in tax. 

In Thompson’s case, HMRC argued that he should be treated as an employee of Sky Sports, rather than as a self-employed contractor. The reason for this is that Sky had a significant amount of control over his work schedule, he was also subject to Sky Sports’ editorial control, and he was not able to sub-contract his work out to others.

Thompson, however, argued that he should be considered self-employed because he operated his own business, he had a degree of independence in his work, and he was able to work for other broadcasters besides Sky Sports.

After a lengthy legal battle, the Court of Appeal has ruled in favour of HMRC. The court found that Thompson was sufficiently controlled by Sky Sports to be considered an employee. As a result, he will be required to pay back approximately £300,000 worth of tax that he had been claiming as a self-employed individual.

Background

In 2017, Thompson began working as a pundit for Sky Sports through his own company, Phil Thompson Ltd. HMRC argued that Thompson was, in fact, an employee of Sky Sports and should therefore be liable for income tax and National Insurance contributions.

Court Ruling

The court found that Thompson was an employee of Sky Sports based on the following factors:

  • Thompson was not free to determine his own working hours or location.
  • Sky Sports provided Thompson with training and equipment.
  • Thompson was required to follow Sky Sports’ rules and codes of conduct.
  • Thompson was part of a team of Sky Sports pundits.

Impact of the case

This is a significant blow to Thompson, who is already under financial pressure following his dismissal from Sky Sports. It is also a reminder of the complexity of IR35 and the potential risks involved for individuals who contract out their work.

The case has far-reaching consequences for the broadcasting industry, as it could lead to an increase in tax bills for other freelancers who work in the industry. It could also make it more difficult for broadcasters to attract and retain top talent.

It remains to be seen how many other broadcasters will be affected by the ruling in Thompson’s case. However, the case has highlighted the challenges that freelancers face in the broadcasting industry.

IR35 specialist and insurer Qdos’ CEO, Seb Maley, commented on the latest IR35 case:

“HMRC consistently pursues high-profile freelance presenters. But this result is in sharp contrast with Kaye Adams’s case a few weeks ago – highlighting just how complex the IR35 rules are, along with HMRC’s persistence in tackling perceived non-compliance.

“The silver lining in this case is that the liability isn’t representative across the board. In our experience, the vast majority of freelancers and contractors can demonstrate that they are genuinely self-employed and businesses can compliantly engage them this way. 

Seb Maley, Qdos, CEO

“This case does highlight the significant cost of non-compliance, though. Incorrectly assess IR35 status and the tax liability can stack up. Businesses should rigorously review each freelancer’s IR35 status from the outset,” suggested Maley.

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