Former tennis professional and Sky Sports commentator Barry Cowan’s recent IR35 appeal dismissal serves as a critical example of the importance of balancing technical legal arguments with procedural diligence when it comes to IR35 cases.
Background and first case at the FTT
The roots of Cowan’s IR35 troubles trace back to his contractual engagements with Sky Sports from 2013 to 2019 through his limited liability partnership, Cranham Sports LLP. HMRC opened an investigation into Cowan’s IR35 status and in December 2021, concluded that Cowan’s working arrangements were akin to employment, thereby falling within IR35. This decision landed Cowan a hefty bill for Income Tax and National Insurance contributions.
Following HMRC’s determination, Cowan had a 30-day window to appeal the decision. However, his legal representatives (his accountants) missed this critical deadline whilst being embroiled in an emailed war of words with HMRC. In an attempt to rectify this, they submitted a late appeal to the First-Tier Tribunal (FTT) in March 2022. The FTT dismissed the late appeal, stating there was “no good reason” for the delay. This procedural failure meant that Cowan’s substantive arguments about his IR35 status were never heard.
A missed opportunity
Despite the potential merits of his case, Cowan’s appeal was undermined by these procedural errors. His legal representatives’ failure to file the appeal within the statutory deadline was a significant oversight. Following a further appeal the Upper Tier Tribunal heard in June 2024, the FTT’s decision has been upheld, emphasising that procedural compliance is non-negotiable and crucial to the appeal process. This dismissal has left Cowan with a substantial tax liability.
A harsh reminder
This case serves as a harsh reminder of the unforgiving stance taken by HMRC and the courts regarding procedural deadlines. While technical arguments are crucial in IR35 cases, ensuring sufficient management of procedural aspects is just as important. Cowan’s representatives’ bullish approach, focusing heavily on technicalities while neglecting procedural requirements, ultimately led to his appeal’s failure.
The long road of IR35 disputes
Cowan’s drawn-out IR35 saga is yet another example of how these disputes can extend over several years, causing significant stress and uncertainty for the taxpayer.
This case underscores the necessity for contractors to secure representation from professionals who not only understand the intricacies of IR35 but also have a proven track record of managing these cases successfully. The ability to handle both the technical and procedural elements effectively is essential to avoid costly mistakes and ensure the best possible outcomes in IR35 disputes.