Ex-Manchester United captain Bryan Robson faces a sizeable IR35-related tax bill after a First Tier Tribunal ruled he was operating as a ‘disguised employee’ during his ambassadorial role at his former club.
The decision means Robson faces a tax bill for the employment taxes HMRC argues he owes for his time working between December 2019 and April 2021.
The exact amount hasn’t been disclosed, as HMRC included additional image rights income in its calculations.
The decision results in Robson facing a tax bill comprised of employment taxes that HMRC argues should have been paid between December 2019 and April 2021.
What happened in the case?
Robson began his ambassadorial duties in 2008, but the tribunal focused solely on the years from December 2019 onwards.
The contractual terms during this period showed that Manchester United engaged Robson directly rather than via his limited company, Bryan Robson Limited.
The Tribunal ruled in Robson’s favour for four of the six disputed tax years (2015 to 2021), determining that he was not operating as a ‘disguised employee’ during this time.
The case hinged on Robson’s role as a club ambassador for Manchester United. For this, he was paid £150,000 every six months in return for making a minimum of 35 personal appearances at events.
HMRC argued that the nature of his work was one of employment rather than self-employment, bringing it within the scope of IR35 legislation. The tribunal judge agreed with HMRC.
Key factors behind the Tribunal’s decision
Here are the main factors taken into account in the Tribunal, including some quotes from the decision.
Economic dependence on the club
Manchester United was Robson’s primary source of income, making up 87% of his income (£171,000) in the 2019/20 tax year and 94% (£319,000) in the 2020/21 tax year.
…although the absence of meaningful restrictions on Mr Robson’s other activities meant that he was free to carry on business on his own account, he had chosen to let most of his other work fall away by the time when the hypothetical contract arose.
Providing personal service
Robson delivered his services personally and had no substitution clause in his contract. It’s hard to see how he could substitute himself.
Integration with the club
Robson’s long-standing links with the club and the nature of his ambassadorial role indicated that he was ‘part and parcel’ of the organization.
the services provided by Mr Robson were demonstrably integral – and not simply accessory – to the business of the club. This is because those services were key to the deepening of the relationship between the club and the sponsors and fans.
Duration of the engagement
Robson’s engagement as an ambassador had been ongoing for more than ten years, further reinforcing the employment-like nature of his relationship with the club.
Taking everything into account
Although some indicators of ‘self employment’ did exist in this case, Tribunal Judge Tony Beare concluded:
…even before taking into account Mr Robson’s dependence on the club for almost all of his income, the length of the relationship between the parties and the fact that Mr Robson was key to deepening the relationship between the club and the sponsors and fans are strongly indicative of a relationship of employment and easily outweigh the minimal time commitment which the ambassadorial role involved.
What does the case mean for IR35 in general?
Although this case doesn’t break any new ground in terms of case law, it demonstrates the importance of examining contractual terms and working practices in IR35 cases.
The case also highlights the risks of being deemed a disguised employee, especially when significant income is derived from a single client.
Having multiple clients and not being financially dependent on just one is a strong indicator of being truly ‘in business on your own account.’
Thanks to Seb Maley, CEO of Qdos for answering our FAQs below:
In this case, it appears from the outside to be a clear ‘inside IR35′ arrangement, given the main employment status pointers indicated ’employment’?
“Robson’s contract had many hallmarks of an inside IR35 engagement. Above all else, the sheer level of control that Man United had over how Robson delivered his services pointed towards an employee-employer relationship, rather than a freelancer-client one.”
How relevant was the fact that Robson switched from a personal engagement with Man U to a business to business arrangement?
“It played a big part, but more for the fact that IR35 couldn’t apply when Robson provided his services personally, as opposed to through his limited company.”
In layman’s terms, why does this case illustrate the importance of contract wording vs. the way Robson carried out his work?
“Mostly, due to the fact that Robson billed through his limited company for a period of the contract, meaning the contract itself was held between him personally and Man United.
While this worked in Robson’s favour, given it meant IR35 couldn’t apply to a large portion of time he spent working as an ambassador, if things aren’t contractually watertight, you run the risk of non-compliance.”
What can contractors take away from this decision?
“It’s an important reminder of HMRC’s appetite for IR35 investigations which, contrary to speculation, can still be launched into contracts completed pre IR35 reforms.
However, given the unique nature of Robson and Man United’s relationship, it’s certainly not a case that typically contractors should be concerned about.”
