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Sky Sports pundit wins £700,000 IR35 tax case

LEICESTER, ENGLAND - APRIL 14: Stuart Barnes (L) and Miles Harrison, the Sky TV rugby commentators look on during the Aviva Premiership match between Leicester Tigers and London Wasps at Welford Road on April 14, 2013 in Leicester, England. (Photo by David Rogers/Getty Images) - David Rogers/Getty Images
LEICESTER, ENGLAND - APRIL 14: Stuart Barnes (L) and Miles Harrison, the Sky TV rugby commentators look on during the Aviva Premiership match between Leicester Tigers and London Wasps at Welford Road on April 14, 2013 in Leicester, England. (Photo by David Rogers/Getty Images) - David Rogers/Getty Images

Sky Sports pundit Stuart Barnes, formerly a professional rugby union player, has won a £700,000 IR35 case against HM Revenue & Customs, which had accused him of working as a “disguised employee”.

Mr Barnes has been locked in a dispute with HMRC over a £700,000 tax bill for income tax and National Insurance contributions which the taxman believed he owed for punditry services provided to the satellite broadcaster between 2013 and 2019.

Mr Barnes worked for Sky through his limited company S&L Barnes Limited, and it was HMRC’s claim that he should have been operating inside IR35 legislation during this time.

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IR35 rules were created to stop contractors working as “disguised employees”, whereby taxpayers set up a limited company in order to pay less tax despite effectively working as an employee.

There have been a number of high-profile IR35 cases in recent years with HMRC demanding tax from well-known TV presenters, including Adrian Chiles who won his £1.7m case last year.

Mr Barnes has successfully appealed against HMRC in a first-tier tribunal, as the court found that he was “in business on his own account” and therefore did indeed belong outside IR35 legislation for the 2013 to 2019 period.

The court said the most compelling evidence that Mr Barnes’s contract with Sky was just one part of his brand was that it accounted for 60pc of his income on average, “while over £150,000 on average would also be earned from other clients”.

The court said: “Sky knew Barnes was in business on his own account and worked for other broadcasters; Sky welcomed that fact and wanted the world’s best commentator for the coverage.”

In addition to working for Sky, Mr Barnes was a columnist for the Daily Telegraph between 1994 and 2005, and also wrote for other newspapers.

Critics of HMRC’s controversial IR35 legislation say that the rules have caused confusion for contractors and businesses alike.

Seb Maley of Qdos, an insurance provider for contractors, said: “This is a big victory – not just for Stuart Barnes, but for freelancers, contractors and the businesses engaging these workers.

“It’s another reminder to risk-averse businesses that contractors can be engaged outside the scope of the IR35 legislation. This win could prove crucial in making it crystal clear to firms that forcing all contractors onto the payroll is unnecessary, not to mention expensive.”

A spokesman for HMRC said: “We note the decision of the tribunal and will carefully analyse this outcome before considering next steps.

“The off-payroll rules ensure that people who work like employees, but through their own limited company, are taxed like employees, creating a level playing field with other workers.

“It’s our duty to ensure everyone pays the right tax under the law, regardless of wealth or status.”