Alan Parry of Sky Sports Hit With £356,420 IR35 Tax Bill

What’s the matter?

If you don’t know yet, Alan Parry has had his appeal against a £356,420.37 IR35 tax liability denied at a First-Tier Tax Tribunal hearing.

But, who is Alan Parry, and what is IR35?

Liverpool-born, one of the most well-known sports commentators in the UK is Alan Parry. He has had a remarkable career spanning three decades and has reached the pinnacle of his field. Since 1973, Parry has kept millions of fans around the world amused. Moreover, he’s been involved with the highs and lows of professional sport. From the pinnacle of European football to international athletics events, Parry has been there and has seen it all. Moreover, he has become renowned all around the world for his informative commentary.

What is IR35?

The phrase “IR35” refers to two sets of tax laws. It intends to prevent tax evasion by employees and the businesses that hire them. These individuals provide their services to clients through an intermediary such as a limited company. But, HMRC would consider them as employees if the intermediary were not used.

HMRC recognizes such personnel as “disguised employees.” So, in this case, they must pay income tax and National Insurance Contributions (NICs) as if they were employees. The effects of IR35 on the economy are substantial. Thus, IR35 aims to stop such individuals like Parry from evading tax.

What is Alan Parry’s stand?

Parry was arguing against HMRC’s one decision that the contracts his limited company (Alan Parry Production Limited) held with BSkyB between the tax years of 2013/14 to 2018/19 belonged inside IR35.

However, the judge believed that there was mutuality of obligation (MOO) between Parry and Sky. Moreover, the presenter also worked for the broadcaster under control. Therefore, they decided that Parry’s relationship with his client was more like that of an employee than one of a self-employed person.

This decision has left him with a tax burden of £356,420.37. Further, that is made up of £133,945.97 in national insurance contributions and £222,474.40 in income tax. Although this sum will be reduced by the Corporation Tax that Parry has already paid. On the other hand, the speaker could make another appeal.

So, Parry still has time to file an appeal with the Upper Tier Tribunal. But, he must do so within 56 days after the FFT decision.

So, is Alan Parry self-employed or an employee of Sky? What do we see?

If we look at some key points, we find that,

• The presenter needed to follow Sky’s orders. This contradicted what Parry argued.

• The degree to which Sky had control over “what, how, when, and where” for the delivery of the services related to the direction Parry adopted from Sky.

• Parry had to get Sky’s approval before accepting more work from other clients.

• Sky supplied the tools Parry needed to do his job.

• Sky hired Parry because they wanted him to deliver their services directly.

• Moreover, Sky’s judgment guided the “hypothetical” right of substitution. When Parry couldn’t complete his work on a particular occasion, Sky made a replacement from its own talent pool.

• Additionally, Judge Beare highlighted the “long-standing nature” of Parry and Sky’s connection.

• Almost all the presenter’s income came from the money Parry made from the tax questions under scrutiny.

• Besides, Parry got his pay for almost all his expenses and didn’t take on any “significant” commercial risk.

• Judges also considered Parry to be the “part and parcel” of Sky’s organization.

When taken as a whole, these elements suggested employment rather than self-employment. Therefore, Judge Beare concluded that Parry was a disguised employee. As a result, he rejected the presenter’s appeal.

What are the reactions after this decision?

Seb Maley, CEO of Qdos said, “The sums alone, in this example, show the astounding cost of getting IR35 wrong.” Alan Parry is the most recent in a long series of prominent presenters involved in IR35 cases with significant tax liabilities. The list included Eamon Holmes, Gary Lineker, Lorraine Kelly, and many others. So, this makes you wonder who the next target of HMRC will be.

Whatever perspective you take, the £356,000 tax bill Parry received serves as a strong reminder of the necessity of IR35 compliance, which contractors and businesses alike must prioritize.

If an IR35 examination were to occur, HMRC would probably pay special attention to the fact that the contracts that Parry and Sky had didn’t necessarily reflect the reality of the engagement.