A tax tribunal has dismissed former Sky Sports presenter Dave Clark’s IR35 case appeal, handing HMRC a high profile victory.
It means Clark, an ex-darts and boxing host, faces a tax bill in the region of £281,084, after it was judged that he wasn’t genuinely self-employed but instead a ‘disguised employee’ who belonged inside IR35.
Clark, who stepped down from presenting in 2020 due to ill health, contested HMRC’s view of his IR35 status in October of last year at the First Tier Tribunal. Here, the contracts between his business Little Piece of Paradise Limited (LPPL) and Sky from 2013 to 2018 were focused on.
A number of factors - from the control Sky held over the contracts to the Personal Service he delivered - contributed to Judge Heidi Poon’s verdict.
We’ll focus on these in detail for you in this article.
Sky controlled the working relationship
Control was a focal point in this case and it was decided that Sky controlled the engagement to the extent where it painted a picture of employment, not self-employment.
Even though Clark had a “high degree of control over how he would perform the services” and wrote his own script and even controlled its delivery, the presenter worked under the direction of Sky’s production manager.
The broadcaster also held full editorial control over any programme, with Clark expected to follow certain requests of the executive producer, including who to interview. Sky also controlled ‘when’ and from ‘where’ the presenter worked, although given many of the shows were live on location, you might argue this was to be expected.
Clark expected to work ‘exclusively’ for Sky
Another deciding factor in this IR35 case was exclusivity. The Judge formed a hypothetical contract based on information put forward by both parties and the contracts themselves. From this she concluded that Clark had to seek permission from Sky before engaging in any new commercial activities. In addition, the broadcaster had ‘first call’ on the presenter’s services.
Exclusivity can, although not necessarily always, prove important in IR35 cases. Genuinely self-employed people should in theory have the freedom to work with whomever they want, unrestricted.
Fixed payment contributes to MoO
How Clark charged for his services was also scrutinised. The presenter received 12 payments monthly a year, amounting to £150,000 for the 64 days of work he was obliged to carry out. Because these payments were split equally and didn’t increase for overtime or reduce when Clark wasn’t working, this strengthened the Judge’s opinion that Mutuality of Obligation (MoO) was present in each contract, which was renewed upon its expiry every year.
Substitution managed by Sky, not Clark
Key in demonstrating outside IR35 status is whether or not the contractor performs a personal service. In other words, could a qualified substitute deliver the work agreed instead?
In this case, Clark did invoke the right of substitution, calling on darts commentator Rod Studd on numerous occasions. However, because Sky arranged this substitution and also paid Rodd (not LPPL) who was looked upon as another member of the team, it was decided that the presenter delivered his services personally, not as a business.
Travel and expenses also factored in
The fact that Sky provided all necessary studio equipment and handled travel and accommodation bookings for the presenter when performing live contributed to the outcome of this tribunal. The broadcaster would also reimburse the host for any ‘reasonable expenses’, such as ‘on-stage’ clothing or travel and accommodation not booked by Sky. This resembles an employer-employee type relationship.
Standing back, Dave Clark’s engagement with Sky included a number of pointers towards an inside IR35 contract, with control factoring heavily into the Judge’s decision.
However, given each contract must be examined on its own merit, that’s not to say this victory for HMRC will have any wider implications for contractors across the board.