In McCann Media Limited v HMRC [2022] TC08435, the First Tier Tribunal (FTT) found a fixed annual payment regardless of the number of appearances to be persuasive when determining that ex-Scottish footballer Neil McCann had fallen foul of IR35 and deemed the relationship between himself and Sky to have been one of employment. 

  • Ex-Scottish football and football pundit, Neil McCann, worked for Sky from 2012 to 2017, contracting via his Personal Service Company (PSC), McCann Media Limited (MML).
  • The employment intermediary rules, known as IR35 impose employment taxes on a PSC where the arrangements between the worker and the end client are such that, if engaged directly, the worker would have been an employee. The PSC must treat the amounts received as employment income of the individual and operate PAYE.
  • During 2018 and 2019, HMRC investigated the company, finding that Mr McCann's contracts were within IR35.
  • HMRC issued PAYE determinations for the years 2013/14 to 2017/18, assessing the Sky income to PAYE and tax of over £200,000.
  • MML requested a Statutory Review and then Appealed to the FTT.

On appeal, the FTT found that:

  • The dates of Mr McCann's appearances were decided upon by agreement between the two parties.
  • MML was paid by Sky regardless of the number of Mr McCann's appearances and those payments were regular and paid in equal instalments based on a fixed annual amount, even outside of the football season.
  • Sky decided upon the 'where' and 'when' of the appearances, including the type of role required of Mr McCann and Sky also had editorial control.

In applying the three-stage test as set out in HMRC v Kickabout Productions Ltd [2020] UKUT 216) the FTT decided that:

  1. The written contract between Sky and MML largely reflected the actual agreement between the two parties.
  2. The hypothetical contract had mutuality of obligation and gave Sky control.
  3. Using the tests set out in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968], the hypothetical contract was a contract of service.

Upon finding that, based on the hypothetical contract, the relationship between Mr McCann and Sky was one of employment, the appeal was dismissed.

Useful guides on this topic

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
What is IR35? How does it work? How is the deemed payment calculated? What expenses are deductible?

Employment Status & detailed checklist
Why is it important to check my employment status? What tests should I use? What is the recent case law? 

External link

McCann Media Limited v HMRC [2022] TC08435


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