Famous Footballer Caught Offside by IR35 Rules: Lessons for Contractors

Background of the Case

Bryan Robson, a legendary figure in English football and a former captain of Manchester United (MUFC), transitioned into an ambassadorial role for the club after his playing career ended. Initially, his agreements for personal appearances and image rights were between himself and MUFC directly. However, from December 2019, the agreement was structured through his personal company, Bryan Robson Limited (BRL).

HM Revenue and Customs (HMRC) later determined that payments from MUFC to BRL constituted ‘disguised employment’ under the off-payroll working rules, commonly known as IR35. These rules are designed to ensure that individuals providing services through an intermediary — such as a personal service company — pay tax and National Insurance contributions (NICs) at rates similar to those of employees.

Understanding the IR35 Rules

IR35 applies if:

• An individual personally performs, or is obliged to perform, services for a client.
• The services are provided through an intermediary rather than a direct contract between the client and the worker.
• If the services were provided directly, the worker would be regarded as an employee for tax purposes.

To determine employment status under IR35, courts and tribunals apply a three-stage test:

1. Mutuality of Obligation (MOO): Does the company have an obligation to offer work, and is the worker obliged to accept it?
2. Control: Does the company dictate how, when, and where the worker performs their duties?
3. Other Relevant Factors: Does the overall relationship resemble employment, considering factors such as financial risk, exclusivity, and integration into the business?

Tribunal Findings

The First-tier Tribunal (FTT) ruled that both mutuality of obligation and control were present:

• Robson had agreed to a fixed number of appearances per year for a set fee, demonstrating an ongoing contractual obligation.
• MUFC had control over the specifics of his engagements, including when, where, and how he performed his duties. Even though he could refuse some requests, the overall structure indicated a subordinate relationship.
• Other significant employment indicators included the exclusivity of his role, the club’s financial reliance on his image, and his compliance with MUFC’s branding guidelines (such as wearing club attire and representing the club at official events).

The tribunal concluded that a hypothetical direct contract between Robson and MUFC would have constituted employment. However, it ruled that only the portion of payments related to personal appearances — rather than image rights — was subject to IR35 tax liabilities.

Key Lessons for Contractors and Businesses

1. Review Your Contracts Carefully Ensure contracts clearly reflect a genuine business-to-business relationship. Simply working through a personal service company (PSC) does not automatically place a worker outside IR35.
2. Demonstrate Business Autonomy If you're a contractor, showing financial risk — such as invoicing multiple clients, providing your own equipment, and setting your own schedule — can help strengthen the case that you're in business for yourself.
3. Beware of Long-Term Exclusive Arrangements Robson’s long-term, exclusive role with MUFC weakened his case. Contractors working exclusively for one client over several years should be particularly mindful of IR35 risks.
4. Consider Tax and NICs Implications If HMRC deems a contract inside IR35, the client (or in some cases the intermediary company) must deduct tax and NICs at source. This could lead to unexpected tax bills if not accounted for.
5. Seek Professional Advice Given the complexity of IR35, it’s advisable to consult an accountant or tax specialist to review contract terms and working practices.

Conclusion

The Robson v Revenue and Customs case serves as a cautionary tale for professionals providing services through personal companies. The distinction between employment and self-employment is not always clear-cut, and misclassification can have costly tax implications. Both businesses and contractors should take proactive steps to ensure compliance with IR35 and avoid unexpected tax liabilities.

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