Stuart Barnes to pay £700,000 in back taxes after HMRC converts IR35 appeal
Rugby union personality Stuart Barnes must pay £700,000 in back taxes after an appeals tribunal ruled he had been operating as an employee of Sky when working on television.
Former England international Barnes played most of his club rugby at Bath and became a high-profile media figure after he retired from playing.
He had two contracts with Sky over a six-year period from 2013 through his company S&L Barnes. However HMRC believed this was covered by IR35 legislation, which meant he should have been taxed on his income as if he was a Sky employee.
Barnes had appealed HMRC’s decision and been successful in the first-tier tribunal in January 2023. But HMRC then appealed to the upper tribunal in a case heard in April.
Judges Scott and Baldwin have now concluded that the relationship “would have been one of employment”.
In a judgement issued yesterday, they said: “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 Mr 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.”
The former fly-half was paid £235,000-£265,000 per year from Sky, which accounted for around 60% of Barnes’s income, and varied between £235,000-£265,000 per year. The majority of the remainder came from his work as a columnist for the Times and Sunday Times.
The total amount in question was £695,000, made up of £481,000 of PAYE and £214,000 of national insurance contributions covering a six-year period.
Dave Chaplin, chief executive of IR35 Shield, who attended the upper-tier hearing in person, said: “This ruling now means that none of the cases involving individuals providing services to Sky TV have succeeded at the tax tribunal.
“The Sky boilerplate contracts used by all these individuals contained considerable onerous provisions, particularly around control, which did not necessarily reflect the level of control exercised in reality. However, as we’ve seen repeatedly in IR35 cases, contractual provisions are central when determining employment status for tax purposes.
“This case underscores the need for freelancers and their clients to ensure that their contracts and working practices accurately reflect the true nature of their relationship.”
