Mr Barnes, a former professional rugby union player, is the latest in a long line of high profile television presenters and commentators who have been targeted by HMRC as owing tax and National Insurance under disputed IR35 status cases.
While some of the previous cases have gone against the television personalities, Mr Barnes was able to show that he was 'in business on his own account' rather than working for the satellite broadcaster as a 'disguised employee'.
Mr Barnes received notification from HMRC that he should have been operating inside the IR35 legislation, and as a result owed a total of £695,461.97 in tax. This was made up of £481,364.20 from PAYE, and £214,097.77 in national insurance contributions.
The case in the first tier tax tribunal focused on contracts his limited company S&L Barnes Limited had with Sky between 2013 and 2019, and it was HMRC’s claim that he should have been operating inside IR35 legislation during this time.
The court considered one of the most compelling pieces of evidence was that Mr Barnes’s contract with Sky was just one part of his income, accounting for 60 per cent on average, while over £150,000 on average would also be earned from other clients.
The court also recognised that Sky knew Mr Barnes worked for other broadcasters and was also a columnist for the Daily Telegraph between 1994 and 2005, and wrote for other newspapers.
The tribunal found in favour of Mr Barnes with the judge deeming him to not be a disguised employee and therefore belonging outside the IR35 legislation, due to being in business on his own account.
Tribunal judge Heidi Poon said: “I have rejected the suggestion from the appellant that the similarities in the actual outworking of the contractual arrangements pertaining to Sky and those to the Times/Sunday Times should inform the substantive issue to any extent. The fact that HMRC have accepted the contractual arrangements with the Times/Sunday Times to fall outside the IR35 regime does not preclude the arrangements with Sky to fall within IR35.”
Seb Maley of contractor insurance providers Qdos 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.”
Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.
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Susie Hughes © Shout99 2023