Sky Sports presenter loses IR35 appeal

Sky Sports tennis presenter has lost an IR35 tax case against HMRC on a technicality.

Barry Cowan had appealed a previous decision by HMRC that he should be treated as an employee of Sky for tax purposes, relating to work carried out between the 2014 and 2019 tax years.

The appeal was made by a partnership intermediary, Cranham Sports, in which Cowan is a member.

In June 2021, HMRC said after looking at communications between Sky and Cranham Sports, the relationship between Sky and Cowan was one of service, and Cowan should be treated as employed by Sky.

Part of the appeal rested on a claim by Cranham Sports that some of the correspondence from Sky was not shown to them before the decision was made.

HMRC initially sent its decision to Cranham Sports in December 2021, outlining that Cranham Sports and Cowan could take up an offer of an internal review if requested within 30 days.

Although the opposing side replied to the email, alleging HMRC had failed to reply to points outlined in an email at the end of July that summer, HMRC ruled that no request for a review had been made for 30 days.

Cowan’s representatives later argued that the dispute should remain open until HMRC had fully responded to these points.

A request for a review was eventually sent through in February 2022, 60 days from the decision letter, which was refused by HMRC.

The tribunal judge, Amanda Brown KC, said: “The applicant concedes that the delay had no reason other than the representative made a mistake and essentially did not realise or believe, in light of the email of 8 December 2021, that time was running against the applicant.

“Rather than seek to remediate the position as soon as possible the representative continued to lock horns with what he considered to be the outrageous conduct of HMRC.

“He did not appeal but continued to make complaint to HMRC,” she said.

Dave Chaplin, chief executive officer of IR35 Shield, said had this case gone to a tribunal the outcome may have been different.

“This highlights the importance, particularly in IR35 cases, why taxpayers should engage with specialist advisors to defend them.

“Losing a fight on a procedural point, without even stepping into the ring will obviously be very disappointing for Mr Cowan.”

Commenting, Dave Chaplin, CEO and founder of IR35 Shield, a tax advisory firm which specialises in IR35 and Off-payroll matters said: “This is the second person to fall foul of the basics, and lose their IR35 case on a procedural point, following the same mistakes made in the case of Michael Lynagh.

“By not responding to the HMRC view of the matter letter and failing to appeal it within 30 days, this basic error has resulted in the case being lost, and the ability to appeal not permitted. Had it gone to tribunal, the outcome may have been different.

“This highlights the importance, particularly in IR35 cases, why taxpayers should engage with specialist advisors to defend them. Losing a fight on a procedural point, without even stepping into the ring will obviously be very disappointing for Mr Cowan.

“Reading the ruling, it appears an opinion was formed by HMRC, without the taxpayer having full access to the material upon which the opinion was made. That doesn’t chime with the concept of treating taxpayers fairly, and whilst HMRC has won a case, without a full hearing, the manner about which they have done so, raises concerns.

Qdos CEO, Seb Maley, added: “You have to feel for Barry Cowan. Through no fault of his own, he won’t have the chance to appeal. If recent IR35 cases involving Sky Sports presenters are anything to go by, this huge error could have cost him a fortune.

“Filing an application to appeal is simple stuff – it should be bread and butter for Cowan’s representatives. What’s really worrying is that it’s not the first time we’ve seen this happen. Late last year it emerged that another Sky Sports presenter, Michael Lynagh, had his request to appeal denied because his accountant missed the deadline.

“It goes without saying that in the event of an IR35 investigation, you need support you can count on. IR35 cases can carry millions in tax liability and HMRC is noticeably ramping up its compliance activity in this area.”