McCann Media Limited vs HMRC

This case involved McCann Media Limited's appeal against the First Tier Tribunal's decision regarding PAYE and National Insurance Contributions under IR35 legislation.

TLDR:

• McCann Media Limited appealed against a decision of the First Tier Tribunal.
• The appeal concerned the application of IR35 legislation to contracts with Sky.
• The Upper Tribunal upheld the First Tier Tribunal's decision.
• The case provides important insights into the application of IR35 legislation.

The appellant, McCann Media Limited (MML), appealed against a decision of the First Tier Tribunal (FTT) regarding PAYE and National Insurance Contributions (NICs) under IR35 legislation. The FTT had dismissed MML's appeal against HMRC's determinations and notices for the tax years 2013/14 to 2017/18, finding that the IR35 legislation applied to MML's contracts with British Sky Broadcasting Limited (Sky).

MML is the personal service company of Neil McCann, a former Scottish Premiership footballer who provided services to Sky through MML. The FTT found that under the hypothetical contract envisaged by section 49 of ITEPA 2003, Mr. McCann could not be considered to be in business on his own account and concluded that the provisions of the hypothetical contract were consistent with a contract of employment.

The FTT refused MML's application for permission to appeal, but the Upper Tribunal granted permission on limited grounds. The grounds of appeal included issues related to mutuality of obligation, the application of the three-stage test set out in Kickabout Productions Ltd, and the proper construction of the hypothetical contract.

The Upper Tribunal upheld the FTT's decision, finding no error of law in the FTT's analysis and conclusions. The Tribunal rejected MML's arguments regarding mutuality of obligation, the relevance of substitution clauses, and the application of indemnity clauses in the actual contracts. The Tribunal also found that the FTT had correctly applied the three-stage test and properly construed the hypothetical contract.

This case provides important insights into the application of IR35 legislation and the construction of hypothetical contracts under section 49 of ITEPA 2003. It highlights the importance of considering the terms of the actual contracts and the relevant circumstances when determining whether an individual should be treated as an employee for tax purposes.

Legal representatives: Mr. M Paulin, counsel, instructed by Tax Networks Limited for the appellant; Mr. R Anderson, counsel, instructed by the Office of the Advocate General for Scotland for the respondents.

Judicial Panel: Judge Phyllis Ramshaw, Judge Nicholas Paines

Case Citation Reference: [2024] UKUT 94 (TCC)