The First-tier Tribunal (‘FTT’) have held in Alan Parry Productions Ltd v HMRC [2022] UKFTT 194 (TC) that the arrangements by which BskyB procured the services of Alan Parry (apparently a well-known commentator on Association Football) were caught by the ‘IR35’ rules. This follows similar decisions on other BSkyB personalities – Dave Clark (‘Little Piece of Paradise Ltd’) and Neil McCann (‘McCann Media Ltd’).
We use the term ‘BskyB personalities’ advisedly, for one of the features tipping the balance in favour of ‘deemed employment’ was the overall impression that ‘in his relationship with BSkyB, Mr Parry was very much part and parcel of the BSkyB live football team and not working independently on his own account.’
It’s now well-established that there are three stages to any IR35 case:
- Stage 1: Ascertain the actual contractual arrangements (i.e. between the client and the personal service company and (less importantly) between the personal service company and the worker).
- Stage 2: Decide on the terms that would have been found in the hypothetical ‘direct’ contract between client and worker.
- Stage 3: Form a view on whether, having regard to all the circumstances, the hypothetical ‘direct’ contract would have amounted to employment (itself a three-stage test).
The main way in which the decision in Parry is important (other than to the finances of Mr Parry, of course) is that it’s the first FTT case to apply the principle recently established by the Court of Appeal in Atholl House. That principle is that if (as often happens and as happened in this case) a contract contains an ‘entire agreement’ clause, then at Stage 1 one must look only at the terms of the written agreement: the approach in Autoclenz to ‘look beyond the terms of the written agreement to find the parties’ “true agreement”’ is not appropriate. Granted, at Stage 2 it’s necessary to take into account all the ‘circumstances’ in which the services are provided: but the actual written contracts ‘will generally be highly material in determining the terms of the hypothetical contract’.
Thus, the main ‘take-away’ from Parry is to underline the importance of careful drafting of the written contract, ensuring that it reflects the way in which the parties intend their relationship to operate in practice. In particular, if the written contract contains provisions implying a degree of control by the client, it may be difficult to argue them away at ‘Stage 2’, even if they are not in practice implemented.
On a broader note, the replacement (in most cases) of ‘IR35’ with the expanded ‘off payroll working rules’ means that the responsibility both for deciding status and for picking up the tab if a wrong decision is made now usually lies with the client. Cases like Parry underline how tricky that decision can be: no wonder that so many clients err on the side of caution.
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