IR35 appeal by Sky tv presenter rejected by tribunal

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Andy Vessey
11 Nov 2021 @ 04:11 pm
in category: IR35

Former Sky Sports presenter, Dave Clark, has lost an IR35 appeal carrying a tax liability of over £281,000. Dave Clark was operating under his limited company, Little Piece of Paradise, when he carried out work for Sky, presenting darts and boxing until he retired in 2020. HMRC have claimed for underpaid taxes from 2013-2018.  

HMRC have been pursuing Sky presenters as part of a concerted IR35 campaign for a good number of years and they believe they are onto a winner. We can probably expect more IR35 tribunal judgments involving those working for Sky in a presenting capacity via their own PSC’s, in the forthcoming future.  

Little Piece of Paradise failed the three IR35 status tests  

Unfortunately for Dave Clark, the First-tier Tribunal found that he failed the three key tests of employment status, thus meaning his case was rejected by the tribunal. Personal service, mutuality of obligation (MOO) and right of control are the key status tests from case law. Read on to find out why Clark failed in these areas in the IR35 tribunal.  

1. Personal service  

There were occasions where Rod Studd, a commentator already known to Sky, was used to cover darts sessions when Mr Clark was unable to do so. Whilst Dave Clark maintained that he himself had recommended Mr Studd as a substitute, Little Piece of Paradise did not pay Studd. Sky entered into a separate contract with Studd and paid him directly. Little Piece of Paradise was therefore not involved in Rod Studd’s engagement as a substitute. 

2. Mutuality of Obligation (MOO)  

Each contract between Sky and Little Piece of Paradise lasted for two years and was renewed on its expiry to provide a continuum for the 6 years under appeal. Sky’s understanding of the contractual obligation was that there was no provision to reduce fees on the basis of a no-show by Clark.  

Although Little Piece of Paradise’s fee was an annual fixed one, this was pro-rated over 12 months and sales invoices were raised on this basis. That fixed fee was agreed on the basis as to include a sum to satisfy Mr Clark ‘paid holiday entitlement’ under the Working Time Regulations 1998. Sky also had the first call on Mr Clark’s services.  

3. Right of control 

The tribunal dismissed the ‘how’ aspect of this test as Sky had engaged Clark for his expertise and knowledge. The ‘what’ aspect was therefore considered to be of greater importance. Sky had full editorial control over any programme and Mr Clark would have to follow the reasonable requests of the executive producer.  

The tribunal looked at control invested in Sky by rights and covenants, it is here that IR35 specialists may have to realign their thinking going forward. The extensive terms in warranties and non-solicitation provisions within the contracts between Sky and Little Piece of Paradise were strengthened by similar and additional terms in the accompanying NDA between Sky and Mr Clark. Sometimes, such contractual provisions are viewed as not taking on sufficient significance but they may have to be interrogated more closely to establish if they do actually have a substantial effect on a worker’s’ status. The assignment of rights to Sky was also seen as an important aspect of control.  

The non-solicitation clause in the contracts and the individual non-compete undertakings in the NDA were viewed as restrictive covenants and affording Sky control over areas of Mr Clark’s activities beyond the confines of the programmes in which he was involved.  

On first impression, I am not sure that I agree with every aspect of the tribunal’s conclusions regarding the control test, but what this does demonstrate is the courts and tribunals increasingly expansive approach to control, which is somewhat concerning.  

Little Piece of Paradise and business on own account  

Although Dave Clark used his own equipment and studio to carry out research, the material factor here was that without Sky, his presenting services would be redundant. Little Piece of Paradise was economically dependent upon Sky.  

Integration with Sky in the case  

The viewing public would perceive Clark as being part and parcel of the Sky organisation and the tribunal considered that by signing the NDA, Clark somehow acknowledged this fact. I find it difficult to reason that the signing of an NDA somehow amounts to a person accepting that they are part and parcel of their client’s’ business, as such documents can be used in a commercial relationship whenever sensitive information is involved.  

In November 2018, Sky changed the contractual arrangements with its on-air talent, which could be viewed as them tipping their hat to a contract of service. However, refreshingly, the tribunal said that HMRC was not entitled to think this was the icing on top of their cake.  

I see little point in making comparisons to what the position would have been under the current off-payroll regime, as the years under enquiry were 2013/14 – 2017/18 inclusive, three years before the extension of the IR35 reforms to the private sector. 

There are too many negative factors stacked up against Dave Clark and I, therefore, don’t anticipate him appealing the First-tier Tribunal’s decision. 

<a href="https://lp.kingsbridge.co.uk/contractor_ir35_review_1/">https://lp.kingsbridge.co.uk/contractor_ir35_review_1/</a><br>

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