In S&L Barnes Limited v HMRC [2023] TC08697, the First Tier Tribunal (FTT) applied the tests from Ready Mixed Concrete and found that Stuart Barnes provided his rugby punditry services to Sky as part of his own business, not as an employee.

  • Stuart Barnes is an ex-England rugby international, who worked for Sky TV from 1994 to 2019, over which time he became to be known as the 'Voice of rugby'.
  • During the period of assessment, 2013 to 2019, he provided his services through his Personal Services Company, S&L Barnes Limited.
  • Through his company, he was also a columnist for The Times and the Sunday Times on a weekly basis, as well as a pundit on TV channels in Ireland and Australia.
  • HMRC reviewed his contract for Sky from 2013 to 2019 and assessed it to be a Contract of service, making him an employee of Sky and subject to Income Tax and National Insurance Contributions (NICs) on his earnings. The amount assessed as due is approximately £214,000.

Mr Barnes appealed to the FTT.

The FTT found that the hypothetical contract between Mr Barnes and Sky consisted of:

  • A contract for personal services (if Mr Barnes was not available, Sky would choose another Sky pundit).
  • No right of substitution.
  • A fixed four-year term, extendable by two years and then at the mutual agreement of the parties after that.
  • The services included punditry, all preparatory work, rehearsals, additional services for Sky’s rugby offering including a written column and mid-week analysis programmes, interviews and other ad-hoc appearances.
  • Sky was to have first call on Mr Barnes subject to his availability and existing commitments.
  • A minimum term of 90 – 120 on-air days up to 228 days in total, for an initial fixed fee of £235,000 per annum rising to £265,000 per annum by 2016-17. This included an allowance for paid holiday entitlement. There was no pay for sick leave.
  • Mr Barnes’ appearances had to adhere to Sky’s broadcasting terms and conditions and general guidelines. Mr Barnes had control of his content within the parameters set out for each show.
  • Sky provided all equipment.
  • Mr Barnes assigned all rights to Sky in relation to his work for them and needed permission to engage in other commercial activities.

When applying the three-stage test from Ready Mixed Concrete, the FTT found:

  • Mutuality of obligation: Mr Barnes did not dispute that there was an obligation on Sky to pay him a fixed monthly fee over the course of the period and in return, Mr Barnes was obliged to perform his service personally. This test was met.
  • Exercise of control: It was found that Sky had control over what type of appearances Mr Barnes made, when these took place (Sky’s ‘first call’ on Mr Barnes’ services, albeit Mr Barnes, had some flexibility here), the location and the how (in that ultimate editorial control stayed with Sky). This test was also met.
  • Other provisions of contract (to suggest a contract for services):
    • Mr Barnes was predominantly a commentator for Sky and provided punditry services, very different from the type of service provided by a presenter.
    • Whilst Sky stipulated the maximum number of days Mr Barnes could work in a year, the actual number varied between 90 and 120 days. This was significantly less than the maximum, so the amount paid could not be seen as a salary but more of a retainer for having the first call on his services.
    • Sky’s ownership of IP rights did not stop Mr Barnes from reproducing his opinions for other media outlets. His Sky analysis was often replicated in his Sunday Times columns.
    • There was much latitude in Mr Barnes’ availability for matches. There was an informal agreement that he would not be available for the Six Nations or other major tournaments, where he was able to retain a high profile through other work.

The FTT also noted that Mr Barnes risked his own reputation when appearing for Sky and his other work outside of Sky was not immaterial, with Sky work making up only about 60% of his total earnings.

Whilst the first two tests were suggestive of a contract of employment, the FTT applied the Court of Appeal's decision in Atholl House Productions Limited, that the outcome of those first tests should not create a presumption of employment. Considering the other factors as part of the third test, it was held that Mr Barnes was in business on his own account and he was not an employee of Sky, caught by IR35. The appeal was allowed.

Useful guides on this topic

IR35: The Sky contracts
The First Tier Tribunal's (FTT) recent decision to uphold Stuart Barnes' appeal against HMRC's IR35 assessment of his contract as a rugby pundit for Sky TV is in contrast to the previous three cases brought against TV personalities working for Sky. So what was different about this case?

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? 

Employment status: Mutuality of obligation
What is a mutuality of obligation? Why is it important in considering employment status?

External link

S&L Barnes Limited v HMRC [2023] TC08697


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