Ex-Liverpool Star's IR35 Case: Tribunal Rules in Favor of HMRC

Former Liverpool and England footballer Phil Thompson recently found himself embroiled in a legal battle with HM Revenue and Customs (HMRC) over the application of IR35 rules to his work for Sky. The First-tier Tribunal (FTT) delivered its verdict, siding with HMRC and imposing a hefty additional tax bill on Thompson.

HMRC contended that Thompson's employment arrangement with Sky, facilitated through his personal service company, fell within the scope of IR35 regulations. These regulations aim to ensure that contractors, who would otherwise be deemed employees if not for the use of intermediaries like personal service companies, pay the appropriate income tax and National Insurance contributions.

The crux of the matter lay in the nature of Thompson's relationship with Sky. HMRC argued that it resembled that of an employee due to various factors, leading to a substantial tax liability of nearly ￡300,000.

The tribunal concurred with HMRC's position, highlighting key aspects such as the lack of income from other projects and the significant level of control exerted by Sky over Thompson's work. Unlike some successful cases where individuals were deeply entrenched in multiple projects, Thompson's association was primarily confined to his role within a specific TV programme at Sky.

This ruling reflects a broader trend wherein HMRC intensifies scrutiny on the employment status of individuals, particularly in industries like television, radio, and sports commentary. Despite varying outcomes in similar cases, Thompson's situation underscores the importance of careful consideration and adherence to IR35 regulations for both contractors and hiring entities.

In conclusion, the FTT's decision in favour of HMRC serves as a reminder of the complexities surrounding IR35 compliance and the potential financial repercussions for individuals and companies operating within its purview.