Sky Sports football commentator Alan Parry fails to clear an IR35 bill of £356,000

The potentially life-altering cost of a fumbled IR35 defence is among the highlights of Sky Sports football commentator Alan Parry failing to clear an HMRC bill of over £356,000.

While corporation tax already paid by Mr Parry’s limited company will reduce that three-figure sum, status advisers are taken aback by the size of the liability facing the 74-year-old.

'Significant, staggering'

Chartergates, a law firm, says that despite other IR35 wins over top presenters, the First-Tier Tribunal ruling in HMRC’s favour last month cues it up for a “significant” collection.

The boss of Alan Parry Productions Ltd can appeal (again) in relation to his BSkyB contracts, but IR35 contract reviewer Seb Maley says that the cost of non-compliance is telling.

“From where I stand,” said Mr Maley, almost imagining himself on a football ‘pitch’ of status, “the sums alone in this case highlight the staggering cost of getting IR35 wrong.” 

'Too large a tax bill for Parry not to appeal'

Made up of income tax totalling £222,474, and National Insurance Contributions totalling £133.945, the HMRC demand was just too big to accept, according to another IR35 adviser.

“Mr Parry got a very large tax and NICs bill, so it is likely that he simply had to appeal,” says the adviser, Bauer & Cottrell’s Kate Cottrell. “Fortunately he didn’t incur barrister fees.”

The liability for Mr Parry is partly so high due to the time period HMRC challenged under the Intermediaries legislation being quite lengthy – some five tax years (to April 2019).

'Disguised employment'

Just the HMRC enquiry period alone might scream ‘disguised employment’ to some cautious IT contractors, who often accept contracts lasting a maximum of three months only.

But it wasn’t a fifth of it.

In fact, despite it not being a relevant status test, duration of service was extensive as Mr Parry supplied commentary services to BSkyB’s ‘Sky Sports’ for 26 years.

'Footie pundit missed only one game in 26 years but even then didn't substitute'

And seeming to thwart any ‘personal service’ argument against IR35 applying, the football pundit failed to substitute once during the two-and-a-half-plus decades.

“In his 26 years, he missed only one game due to illness but, even on this occasion, he did not attempt to send a substitute. Sky just found someone else,” Ms Cottrell told ContractorUK.

“And for the five years [probed], he worked only for Sky mostly -- 100% of his time for two years, then 90%, 95% and 96% of his time. So little room to claim ‘being in business.’” 

Mr Parry’s income being generated “nearly all” from Sky was how tribunal judge Beare described it.

'12 key reasons, including BSkyB retaining intellectual property'

Further problematically for Mr Parry’s hopes of being found outside IR35, financial dependence was just one of 12 key reasons that the judge handed him to confirm his status as ‘inside IR35.’

“BSkyB could not terminate the relationship at will; BSkyB had control over Mr Parry's use of Social Media [and] BSkyB retained all intellectual property,” observes WTT Consulting.

Running through the 12-point inditement, WTT added: “Dismissing Mr Parry's appeal, the judge…[also] cited a number of [key] factors…like Mutuality of Obligation [and] Control.”

'Misplaced'

Mutuality, because BSkyB agreed to pay specified amounts of remuneration to Mr Parry and, in return, Mr Parry agreed to perform services for BSkyB.

At the hearing, an argument tabled on Mr Parry’s behalf that there was insufficient MoO because if he did not commentate, he simply wouldn’t get paid, was rejected as “misplaced.”

Meanwhile ‘Control’ went against the soccer commentator because “each hypothetical contract did confer on BSkyB control over the ‘what, how, when and where’” of his work.

'Parry got expenses whether he worked or not'

Related, Mr Parry’s services were carried out using BSkyB-owned equipment, and on some of his contracts, he had to ask for “prior written consent” to work for others, the ruling adds.

“In any event, Sky had first call on his services,” says Ms Cottrell. “Mr Parry was paid a monthly fee and expenses whether he worked or not -- come what may!

“And more crucially Sky’s evidence in HMRC’s meetings notes supported it all. Worst of all, perhaps, Mr Parry finally accepted the lay of the land in 2019, as he joined Sky’s payroll.”

'Soccer commentator's case is not one many would attempt to defend'

So, “standing back and looking at this overall picture” continued Cottrell, a former tax inspector, Mr Parry’s case is “not a case that many IR35 experts would attempt to defend.”

Potentially, that could be why the judgment indicates that at times, his defence ran into difficulties.

Specifically, and on top of the ‘misplaced’ MoO defence, the judge spoke of Mr Parry’s legal representative submitting arguments based on “misunderstanding” and “misconstruction.”

'Errors'

In addition, judge Beare found the representative made “errors” in “construing the express terms of the contracts,” with “inevitable consequential errors in determining the terms of the hypothetical contracts; further to “errors in applying the RMC [Ready Mixed Concrete] test”.

Yet football commentator Mr Parry possibly scored an own goal too.

Asked about why he did so much of his work exclusively for BSkyB, Mr Parry said the broadcaster paid well, had the lion’s share of the market, but then asked, rhetorically:

“Why would I show any interest in BT Sport – indeed why would they show any interest in me?”

Judge Beare, who found Mr Parry was “part & parcel” of BskyB, reflected: “To my mind, that exchange demonstrated the closeness of the relationship between BSkyB and Mr Parry.”

'IR35 battle hanging over him for six years'

At Bauer & Cottrell, its co-founder is sympathetic however. And not just to the appellant.

“My commiserations to Mr Parry who has been waiting for a result since 2016 – so some six years this IR35 battle has been hanging over him,” Ms Cottrell began.

“I feel sorry for tribunal judge Beare, having to sit through three days of evidence and argument, and so I congratulate him on such a comprehensive write-up of the case. 

“But I also feel sorry for anyone else tasked with reading the judgment as it amounts to some 60 pages!”

The IR35 specialist added: “This is a FTT case that does not create case law precedent. It may, however, have influence and could be useful for anyone awaiting their case to be settled by the FTT or deciding if they should appeal in the first place.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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