Mutuality ‘played key role’ in ex-footballer Neil McCann’s IR35 loss with Sky, contractors warned

Mutuality in the Neil McCann case could be cause for IT contractors to stop disregarding celebrity IR35 cases as not really their concern.

The Sky Sports pundit, who this month lost to HMRC on IR35, had a fixed monthly fee arrangement irrespective of the work completed.

Similarly employee-like, his contract with Sky specified an annual sum, which was then broken down into 12 fee instalments a year.

'Outside the football season'

McCann then pocketed that fee (raised on an invoice he submitted), regardless of how many games he covered for Sky in any month.

Worse still for the ex-footballer’s bid to shake off Mutuality, the ruling says this set-up “continued outside of the football season.”

IR35 cases involving media-types often have limited application, but these MoO ‘signposts’ will have equivalents in the freelance IT space.

'Mutuality played key role in McCann's IR35 defeat'

That’s significant, because Mutuality of Obligation “played a key role” in the former Rangers ace losing to HMRC, says an IR35 expert.

“Getting a fixed monthly fee irrespective of work done undid his claim that the work was ‘ad-hoc,’” the expert, Charlie Hemsworth also told ContractorUK.

“[Whether you’re famous or not], it’s clear that HMRC increasingly views the test for MoO as uncomplicated.”

A senior consultant at off-payroll working advisory Bauer & Cottrell, Hemsworth said the rub for PSCs is that the courts are agreeing.

In the ruling against McCann on MoO for example, it says a contract can be one of employment if it ‘merely provides for a worker to be paid for the work performed.’

It also says provisions in such a contract to let either side withdraw pre-performance “do not of themselves negate” MoO.


In its analysis last week of McCann’s IR35 defeat, law firm ReLegal Consulting used the same word to describe how Mutuality is being regarded; “uncomplicated.”

The firm did clarify, however, that just because Mutuality is present does not by itself make it a contract of employment.

Yet MoO is staying in the spotlight due to the incoming ruling in PGMOL V HMRC, and was determinative in the IR35 ‘defeat’ of RALC Consulting.

'In RALC Consulting, mutuality was at the fore again'

In fact, reflecting on RALC, Mark Taylor, director of Chartergates Legal Services says “in common” with McCann’s loss, mutuality was at “the fore again.”

In a longer analysis it shared on Friday with ContractorUK, the legal services advisory said in relation to the judgment against McCann:

“When it comes to the essential ingredient of mutual obligation, the requirement of the engager…[Sky] to make regular payment regardless of the amount of work carried out each month, was determined by the FTT and upheld by the UT to be sufficient to satisfy this condition.”

'Rigorously reviewed and reassessed'

Seb Maley, CEO of Qdos, says the McCann case “demonstrates the complexities and nuances of the IR35 legislation.”

Further sounding aware that Mutuality was a key own goal, if not the key own goal by McCann (and Sky), Mr Maley added:

“IR35 status should be rigorously reviewed from the outset. And reassessed regularly.”

'The entire picture'

To Hemsworth though, the McCann judgment in HMRC’s favour serves as a reminder that IR35 is about “the entire picture.”

The IR35 expert told ContractorUK: “What set McCann apart from figures like Kaye Adams, and Adrian Chiles [pending his UT judgment], was the inability to demonstrate a genuine in-business position -- a critical factor.

“While some commentators say media personalities bear little resemblance to typical IT contractors, the key lesson remains universal: there is no single determinative factor; working practices must substantiate an overall outside IR35 position, and written contracts must fully support that position.”

Pressed on Mutuality in particular, the Bauer & Cottrell consultant responded: “Despite the ongoing ambiguity surrounding MOO – as we’re wating for it to be clarified in the PGMOL outcome, it’s clear that engagers and contractors are expected [by HMRC and the courts] to have a solid grasp of this employment status fundamental.”

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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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