Minutes to read 5
Former England footballer Bryan Robson is the latest high-profile celebrity to have won his IR35 tax case against HMRC.
Bryan Robson, a former professional football player who played for Manchester United and England in the 1980s and into the 90s, as well as various other clubs in the 90s, before becoming assistant manager of England.
During this time, he incorporated Bryan Robson Limited, appointing himself and his wife as directors and shareholders for the company. He used this company for his commercial work, alongside being a player and manager.
Last week, he won the majority of his appeal to the First-tier Tax Tribunal for services provided to Manchester United. These ran from 2015/16 to 2020/21 through his company BRL, with the case questioning if IR35 legislation deemed him an employee of the club, or a contractor.
Accounts indicated that BRL had already paid corporation tax and dividend tax on the earnings, which could be offset against any IR35 bill.
HMRC argued that the final 16 months should be treated as deemed employment for the majority of his earnings, after the first 4 years and 8 months.
The contract with Manchester United was for £300,000 a year, for image rights and a minimum of 70 personal appearances including match days and stadium tours.
Because these earnings were mainly from MUFC, the tribunal found that the absence of other engagements was “attributable to Mr Robson’s personal choice” and “not to a shortage of opportunities to work for others”.
Concluding the tribunal, it was decided that parties should agree and set aside earnings to cover the extra tax due under IR35 for that final 16 months, with the other 4 years and 8 months being conceded.
Similarly, this is the same way Gary Lineker also won his IR35 case.
IR35 has always been a complicated state of play, with many contractors falling into the same patterns and not paying the tax they should under the contracts that they’re working with.
It’s more important than ever for self-employed individuals to stay up to date with IR35 news and understand how rulings and changes might affect them, which is why working with an accountant is so important.
Recent IR35 Updates and Key Changes
IR35 remains a constant issue and worry for many contractors, and recent developments indicate that HMRC is continuing its crackdown on perceived tax avoidance by self-employed professionals.
Some recent key changes and news include:
Rise in employer NICs
From the 6th April, many will already be aware of the rise in employer national insurance contributions. The 1.2% rise and reduction in the threshold it becomes payable means that it will become much more desirable for both contractors and hirers to use off-payroll workers outside IR35.
Businesses that use off-payroll workers deemed to be inside IR35 will face an increase in hiring costs overall.
Contractors therefore will be renegotiating pay rates to ensure their take-home pay doesn’t reduce. Some businesses will be reassessing their IR35 worker policies. If you’re unsure of how your IR35 status might affect tax payments or the way you work, contacting Gorilla Accounting and appointing one of the team to manage your finances could help.
Umbrella regulation
The government has pledged to tackle non-compliance in the umbrella company market.
To do this, they are bringing forward the legislation to April 2026, intending to recover £500m of tax revenue lost through tax evasion schemes. Any liabilities for non-compliance will pass to end hirers, if workers haven’t been supplied through a recruitment agency.
Although the outline for the legislation hasn’t fully been published yet, it’s important that employers and contractors keep an eye out for changes this year ahead of the date. Due diligence is incredibly important when working with providers and regular IR35 reviews will ensure that contractors are correctly inside of the off-payroll rules.
Increased HMRC Compliance Checks
HMRC has ramped up its compliance checks on businesses engaging contractors and this is set to continue.
Companies that fail to correctly assess a worker’s IR35 status could face significant tax bills and penalties. This is particularly crucial for firms where self-employed contractors are most prevalent.
Case Law Developments
High-profile cases such as Bryan Robson are shaping how IR35 is interpreted.
Recent tribunal rulings have emphasised the importance of control, mutuality of obligation, and substitution clauses in determining employment status. Contractors should review their contracts carefully to ensure compliance with current interpretations of IR35.
Changes in HMRC’s CEST Tool
HMRC’s Check Employment Status for Tax (CEST) tool has faced ongoing criticism for its reliability.
In 2024, HMRC reportedly updated the tool in an attempt to provide clearer determinations. However, experts still recommend seeking professional advice rather than relying solely on CEST. Gorilla Accounting can clear up any confusion you may have around your tax liabilities, no matter how you work.
Government Reforms
Although not confirmed, there have been further calls for reforms to IR35. Over the next couple of years, there is potential for more legislative changes for self-employed individuals, so it’s crucial for contractors to stay on top of these.
How IR35 Affects the Self-Employed
For self-employed contractors, IR35 remains a significant concern. Being deemed “inside IR35” means you’re treated as an employee for tax purposes. This can lead to a substantial reduction in take-home pay. If you’re “outside IR35”, you’re genuinely self-employed, have responsibility for your own tax obligations and your tax contributions are done via your annual self-assessment.
Some key issues self-employed individuals should consider include:
- Employment Status Assessment: Ensuring that contracts and working arrangements reflect genuine self-employment.
- Financial Impact: Understanding how an IR35 determination could affect earnings.
- Tax Liabilities: Managing tax obligations efficiently to avoid unexpected bills.
With HMRC increasing its enforcement efforts, contractors need to take proactive steps to mitigate IR35 risks.
How an Accountant Can Help Navigate IR35
If you’re self-employed and not currently working with an accountant, now is the time to consider professional assistance. A specialist Gorilla accountant can help you:
1. Review Your Contracts
Our team of expert accountants have IR35 expertise and can assess your contracts to identify risk factors and ensure compliance with current regulations.
2. Provide Tax Planning Advice
Understanding your tax obligations and structuring your income tax-efficiently is crucial. Gorilla Accounting can help you plan ahead to minimise tax liabilities whilst remaining compliant.
3. Assist with HMRC Disputes
If you’re facing an IR35 investigation, having an accountant by your side can make a significant difference. They can liaise with HMRC on your behalf, ensuring that your case is presented effectively.
4. Ensure Proper Record-Keeping
Accurate financial records and documentation can support your case in the event of an IR35 inquiry. With MTD undergoing a phased rollout, contractors need to look at digitising their bookkeeping to align with HMRC requirements.
At Gorilla Accounting, FreeAgent is included in your fixed-fee package, meaning you can access your digital bookkeeping on the go wherever you are working.
Working with Gorilla Accounting
The latest IR35 news, including Bryan Robson’s tax case victory, highlights the ongoing challenges and complexities surrounding IR35. With HMRC continuing its enforcement efforts, self-employed individuals must take proactive steps to ensure compliance and protect their earnings.
If you’re concerned about how IR35 affects you, appointing an experienced accountant is one of the best steps you can take. Our expertise can help you navigate the rules, structure your finances efficiently, and stay ahead of potential tax issues.
If you need assistance, our team of specialist accountants is here to help you navigate the complexities of IR35 with confidence. You can get a quick quote today on our website, or call us on 0330 107 9676 to speak to a member of our New Business team.
