Football pundit and former Scottish footballer and manager Neil McCann lost his appeal at the Upper Tribunal (UT) that his contract with Sky was employment.  This finding confirms liabilities to tax and NIC of over £200,000.

Neil McCann worked for Sky from 2012 to 2017 through his Personal service company. In McCann Media Limited v HMRC [2024] UT0094, the UT heard arguments on three grounds against the original First Tier Tribunal (FTT) decision:

Ground 1: mutuality of obligations

• The Appellant argued that he was able to take on an additional role as interim manager of Dundee FC without consultation with Sky during the peak period of the football season. This demonstrated his contractual autonomy was at odds with the irreducible minimum for the existence of a contract of employment.
• HMRC countered that Mr McCann informed Sky in advance of taking the Dundee appointment because he didn't want to 'burn his bridges' with them. Also, it is common for employees to serve more than one employer.
• The UT noted the FTT had found Sky could terminate the contract if Mr McCann was unavailable to provide services for over four weeks. Also, he was prohibited from supplying similar services to other television, radio, media, print or betting organisations.
• The UT found there was no error in the FTT's decision.

Ground 2: inconsistent with employment

• The Appellant argued the FTT erred in law by failing to take into account and/or properly apply the third limb of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] (RMC), namely that other factors of the contractual relationship were inconsistent with employment. A contractual right to substitution and indemnity clauses in the Sky contract applied equally to the substitute. An unfettered right to provide a substitute is inconsistent with employment.
• HMRC said a statement by the parties to the contract that they did not 'wish to create or imply any mutuality of obligations' was found by the FTT not to be the proper characterisation of the hypothetical contract and of itself proved very little.
• The UT noted permission to appeal was refused in relation to the FTT's findings on substitution and dismissed those arguments by the Appellant. Indemnity clauses are not prima facie inconsistent with employment. A qualified power of termination is not incompatible with employment.

Ground 3 

• The Appellant argued the FTT erred in law in applying the three-stage test set out in HMRC v Kickabout Productions Ltd [2020] UKUT 0216 which is to find the terms of the actual contractual arrangements, ascertain the terms of the 'hypothetical contract' and consider whether the hypothetical contract would be a contract of employment. This is determined in turn, by reference to the RMC case. They argued the FTT had conflated the actual contractual terms with the process of construing the hypothetical terms.
•  HMRC submitted the Appellant was trying to point to a misdirection where none existed.
• The UT saw no error of law in the FTT's approach.

The appeal was dismissed.

Useful guides on this topic

How to appeal an HMRC decision
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Personal Service Company (PSC) tax
HM Revenue & Customs (HMRC) define a service company as a company that generates the majority of its income from supplying services rather than goods to clients. What is a PSC?  What are the tax implications for a PSC?

IR35: Off-Payroll Working
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Employment Status & detailed checklist
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External link

McCann Media Limited v HMRC [2024] UT0094