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Former Manchester Utd footballer, Bryan Robson, has been found by HMRC to have been a âdisguised employeeâ regarding his work as a Global Ambassador for the football club, in a case that highlights the complexities and nuances of IR35 tax legislation.
His tribunal case, which dates back nearly a decade, underscores the complexities surrounding IR35 legislation. This law aims to determine whether individuals should be classified as self-employed or employees for tax purposes.
The four-day hearing focused on whether Robson’s work fell under the off-payroll working rules, also known as IR35. The tribunal has instructed the parties involved to agree on the additional tax Robson owes.
There is a lot that can be learnt from this case, which still might be appealed. Contracts must be watertight, with each party to be fully aware and in agreement of terms and conditions. The contract is after all, the first port of call for HMRC in an investigation is the contract itself.
Bryan Robson entered into “Personal Ambassador Agreements” with MUFC to attend events and make appearances. HMRC conceded that appeals for periods before December 2019 should be allowed, as the limited company was not part of these agreements, meaning there was no “intermediary” subject to IR35.
After an enquiry, HMRC determined that Robson’s engagements were caught by IR35, raising tax and National Insurance assessments for the years April 2016 to April 2021.
The tribunal had to decide if the hypothetical contract between Robson and MUFC would have been an employment contract. Using the three-stage process from the Kickabout CA and Adrian Chiles cases, the tribunal identified the contract terms, constructed the hypothetical contract, and assessed its employment nature.
The hypothetical contract included personal appearances, fixed and additional fees, restrictions on endorsement deals, and requirements to wear club apparel. Robson’s long-standing relationship with MUFC, including his ambassadorial role since 2008, supported the view of an employment relationship.
The FTT’s ruling that Robson was inside IR35 is based on four key factors, with significant weight placed on the Atholl House judgment (the Kaye Adams IR35 case). FTT judge Tony Beare concluded that IR35 applied to the engagement during the disputed period of just under 16 months. The decision was made on the following grounds:
1. Robson was required to personally provide the services throughout the engagements.
2. A minimum number of appearances was agreed upon, and although Robson declined some events, he accepted the need to fulfill the minimum commitment.
3. While Robson had some autonomy in how he conducted himself at events, MUFC had sufficient control over the what, when, and where of the appearances, as well as how the events were managed.
4. MUFC retained the right to impose sanctions and exercise control over Robson.
For businesses engaging contractors, the Robson case reinforces the need to adopt robust IR35 compliance practices. Consider these key steps:
As a result of the case, Robson was deemed an employee for IR35 purposes. However, he was not held liable for taxes on earlier years because HMRC had incorrectly identified the employer. The correct “employer” was MUFC, not Robsonâs limited company.
If you have any questions about IR35 or compliance, our team are always on hand to help. You can get in touch by calling: 01625 546 610 or emailing info@umbrella.co.uk