Scottish football pundit loses £190k IR35 case

Former Scottish footballer and Sky presenter, Neil McCann, faces a tax bill for £190,047.60 over untaxed earnings under intermediaries rules

McCann was a former Scottish Premiership footballer who played for Rangers, Southampton and Scotland from 1998 onwards, and after retirement qualified as a coach, working as interim manager of Dundee FC for a short period.

When he moved into work as a football pundit, he set up a personal services company, McCann Media Limited (MML) in 2009 which he subsequently used for payments when he worked at Sky as a presenter.

The Upper Tribunal hearing followed an original First Tier Tribunal (FTT) appeal in 2022 when McCann disputed a number of HMRC determinations and notices.

The amount of tax outstanding was calculated at £190,047.60 by HMRC, although the final figure was subject to negotiation.

The issues in this appeal concerned the FTT’s approach to consideration of the contract between the appellant and Sky, the terms of a hypothetical contract and the question of whether McCann would have been an employee of Sky, under a contract of service, or whether he would have been providing his services as a self-employed person under a contract for services.

McCann was the only person who provided services on behalf of MML under the Sky contracts and there was no evidence of McCann providing services to, or being engaged by, anyone other than MML during the tax years in question.

The Sky contracts stated that McCann was to be paid an annual fee in monthly instalments. He was paid fees of between £100,000 and £130,000 for the years 2012 to 2017.

The Upper Tribunal accepted the FTT’s evaluation and conclusion on mutuality of obligations. The First Tier Tribunal stated that McCann could ‘not be considered to be in business on his own account’ under the terms of the Court of Appeal’s hypothetical contract approach in Atholl House and that the provisions of the contract were consistent with a contract of employment.

The appellant’s barrister Michael Paulin argued that the FTT erred by; i) failing to take care to ensure that ordinary principles of contractual interpretation were correctly applied, ii) wrongly construing the terms of the actual contracts and iii) permitting such errors to infect the ascertainment of the terms of the hypothetical contract.

HMRC’s advocate, Ross Anderson submitted that the FTT’s approach was consistent with the guidance in Atholl House CA. He stressed that ‘the reference to “blurring”, or the use of a conditional “would” do not amount to any error of law and on no view can it be considered that they amounted to a fundamental misdirection or misunderstanding of the position and still less would any infelicity of language render the FTT’s decision in this case “irredeemably incorrect”.’

The judges on the Upper Tribunal said although Paulin ‘attempted to bolster this ground by inviting us to find that the paucity of references to the actual words of the contract in and the glossing over the terms in demonstrates how the FTT blurred the stages he failed to provide any specific examples other than the two points identified’.

Having weighed up the arguments, judges Phyllis Ramshaw and Nicholas Paines said: ‘We discern no error of law in the FTT’s approach. Whilst the use of the term “blurring” may not be an apt description of the Upper Tribunal’s observations in Atholl UT the FTT clearly understood the import of those observations. In this case the FTT appears to have deferred analysis of the hypothetical contract until after it determined the terms of the actual contract.’

The appeal was dismissed.

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