Rugby commentator Stuart Barnes loses £700,000 IR35 case against HMRC

Former Sky Sports rugby commentator Stuart Barnes is the latest celebrity to be stung by IR35 after a top tax tribunal overturned his appeal to foot a near £700,000 bill to HMRC.

The former English rugby union player is known as “the voice of rugby” and following his retirement from the sport in the mid-90s, he became a freelance writer and television presenter.

Through his personal service company, S&L Barnes (SLB), Barnes has provided services in relation to rugby union to a number of media organisations including Sky Sports.

Between 6 April 2013 and 5 April 2019, SLB provided the services of Barnes to Sky TV in the form of two contracts.

HMRC considered that the contracts fell within the intermediaries legislation, commonly known as IR35.

As a result, the tax agency considered Barnes was taxable on his income from Sky as if an employee, and issued SLB with determinations in respect of income tax deductible through pay as you earn (PAYE) and national insurance contributions for that period.

The overall quantum is £695,461.97, not including interest.

Back in 2022, Barnes appealed against HMRC’s decision to the First-Tier Tax Tribunal (FTT), and at the start of 2023, the Tribunal granted his appeal.

The tax agency went on to appeal this decision to the Upper Tribunal and parties were in front of judge Scott and judge Baldwin in April.

On Wednesday, the Upper Tribunal granted HMRC’s appeal, and set aside the FTT decision.

The tax agency based its appeal off two grounds, it lost on ground one but won on ground two.

In the written judgment, the judges stated: “The long duration of the contract, the absence of a right of substitution, the right of first call for 228 days a year (as varied), the rights of exclusivity, the absence of financial risk and the overall length of the relationship with Sky are factors which in our opinion collectively outweigh the right of Barnes to exploit his work product, his agreement regarding availability and the fact that he was in business on his own account outside his relationship with Sky.”

Barnes is the latest celebrity to be caught up on IR35 issues, following Adrian Chiles, Gary Lineker, Lorraine Kelly and Eamonn Holmes.

Commenting on the Upper Tribunal’s decision, Dave Chaplin, CEO of IR35 Shield said: “The Stuart Barnes case was a close call that could have gone either way.”

“This ruling now means that none of the cases involving individuals providing services to Sky TV have succeeded at the tax tribunal,” he added.

While Seb Maley, chief executive of Qdos noted “there are certainly lessons to be learned from this case, both for freelancers and businesses engaging them.”

“Rigorous IR35 determinations must be made at the start of a working relationship, while IR35 status should be continually reviewed as this relationship evolves. By no means is it a tick-box exercise,” he added.