Sky Sports presenter hit with £356,420 IR35 bill

Football commentator Alan Parry has his IR35 case appeal dismissed

Sky Sports presenter, Alan Parry, has had his appeal against a £356,420.37 IR35 tax bill dismissed at a First-Tier Tax Tribunal hearing – as the well-known football commentator becomes the third freelancer engaged by Sky to lose an IR35 case in a matter of months.

Parry was contesting a decision made by HMRC that the contracts held between his limited company (Alan Parry Productions Limited) from 2013/14 to the 2018/19 tax years belonged inside IR35.

But due to Judge Beare taking the view that Mutuality of Obligation (MOO) existed between Parry and Sky, with the presenter also said to have worked under the control of the broadcaster, it was decided that Parry’s relationship with his client reflected one of employment, rather than self-employment.

It leaves Parry with a tax bill of £356,420.37, made up of £222,474.40 of Income Tax and £133,945.97 in National Insurance Contributions. However, it should be noted that Corporation Tax already paid by Alan Parry Productions Limited in this period will be offset from this amount. 

What’s more, Parry could yet appeal at the Upper Tier Tribunal – something he must do within 56 days of the FFT verdict. 

Key points, at a glance

• Direction - the presenter was obliged to work under the direction of Sky, which decided the matches Parry commented on, from where and when. 
  
  
• Control - closely tied to the direction Parry took from Sky was the control the broadcaster held over “what, how, when and where” the services were provided.
  
  
• First call - Parry had to seek consent from Sky before taking on additional work for other clients.
  
  
• Equipment - Sky provided the equipment needed for Parry to carry out his role.
  
  
• Personal service - Sky engaged Parry because they wanted him to provide his services personally. 
  
  
• Substitution - the right of substitution was ‘hypothetical’ and based on Sky’s discretion. On one occasion, when Parry couldn’t carry out his work, Sky chose a replacement from its own talent pool. 
  
  
• Termination - Broadly speaking, Sky couldn’t stop working with Parry at will. 
  
  
• Period of time - Judge Beare referenced the “long-standing nature” of Parry and Sky’s relationship.
  
  
• Income - the money earned by Parry in the tax questions scrutinised accounted for all or almost all of the presenter’s income.
  
  
• Commercial risk - Parry didn’t take on any “meaningful” commercial risk and was reimbursed for nearly all of his expenses.
  
  
• ‘Part and parcel’ - it was also deemed that Parry was ‘part and parcel’ of Sky’s organisation.

Together, these factors painted a picture of employment, rather than self-employment. As a result, Judge Beare took the view that Parry had been operating as a disguised employee and dismissed the presenter’s appeal. 

The wider implications 

So what does such a high profile victory for HMRC mean for contractors?

Firstly, that IR35 compliance is vital and protection from the risks posed by the legislation should remain a priority for contractors regardless of the introduction of reform. 

Despite the responsibility and liability transferring away from contractors under IR35 reform, HMRC retains the right to launch retrospective IR35 investigations relating to contracts completed prior to the introduction of the rule changes.