Former Sky Sports presenter, Dave Clark, has lost his IR35 case appeal at the First Tier Tribunal - a result that leaves the well-known host of darts coverage with a tax bill of £281,000.
The decision follows a tribunal hearing that took place in October 2020, in which Clark was contesting the original verdict that the contracts held from 2013 to 2018 between the presenter’s company, Little Piece of Paradise Ltd (LPPL) and Sky, belonged inside IR35.
The tribunal notes indicate that Clark’s working relationship with Sky had many hallmarks of an inside IR35 contract, most of which centred on the three key IR35 status tests - Mutuality of Obligation (MOO), Control, and Personal Service.
The fact that the fees paid by Sky were “neither reduced for no-show nor increased when Mr Clark had to work over time” suggested that the presenter would likely be paid whether he worked or not, in the way that an employee is.
This strengthened HMRC’s view that Mutuality of Obligation existed between the two parties - as did the £150,000 annual fixed fee charged by Clark to Sky, which was split equally into 12 monthly payments.
Despite Clark writing his own script and controlling his delivery of services provided, Judge Heidi Poon took the view that these contracts were ultimately controlled by Sky. Working under the direction of the production manager and being instructed to follow requests of the executive producer, such as who to interview, contributed to this decision.
This control extended to ‘when and where’, with Clark not having the option to choose when to work or where from. While many of the shows were presented live, often on location at a darts event, it was Sky that could choose whether or not to cover them, with Clark then told to present the coverage.
The fact that the broadcaster had ‘first call’ on Clark’s time was another deciding factor in this case. Sky held the ‘right of first call’, with the presenter expected to reserve 64 days in his diary to work should the broadcaster choose to exercise this right.
While it was clearly difficult for Clark to work with full autonomy - a challenge many freelance presenters face due to editorial control restrictions - genuine contractors should not work under the control of their client and, where possible, retain the freedom to choose how they deliver their services, when, and where from.
Presenters are sometimes synonymous with the programme they host, which can make it difficult for freelance broadcasters to prove the service they provide isn’t performed personally, and that a substitute can be supplied.
However, in ‘LPPL v HMRC’, Clark argued that he was able to substitute in another presenter and did so on numerous occasions, with darts commentator Rod Studd standing in for him. But the sticking point was that instead of Clark arranging and paying Mr Studd for this, as would be the case in other business to business engagements, it was Sky that contracted directly with the substitute.
This was explained in the tribunal notes: “For the presenting shifts which he agreed to work in place of Dave Clark a separate fee was negotiated between Sky and Rod Studd. Sky paid Rod Studd for these additional services.”
The key takeaway here is that for the right of substitution to constitute as genuine, contractors should be responsible for sourcing, managing, and paying the substitute, not the client.
As our CEO, Seb Maley, explained to the FT Adviser, it’s important that neither contractors, nor businesses engaging or placing these workers, read too much into HMRC’s victory:
“The fact of the matter is that Clark’s working relationship with Sky - like many other presenters - was quite different to ones held by typical contractors. It’s also possible that Clark may appeal the case again and overturn this decision.
“Ultimately, the judge’s view was that Clark was subject to control by Sky, who also paid him whether he worked or not. What’s more, he was restricted from presenting for other companies, which the judge believed painted a picture of employment rather than self-employment. But to reiterate, this certainly isn’t the case across the board.”
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