This latest IR35 case to be decided in the tribunal courts involves former professional footballer and manager Bryan Robson, and his work as an Ambassador for Manchester United Football Club, via his limited company, Bryan Robson Ltd.
This case was unusual due to the dual nature of Robson’s contracts, which combined image rights licensing with ambassadorial services. Over the four day hearing, the First-Tier tribunal hashed out the complex distinction between payments attributed to “image rights”, and those for services personally provided by Robson.
A mixed outcome – some in, some out!
Although Robson had been serving as an Ambassador for Manchester United since 2008, the years under question were 2015/16 to 2020/21, with Robson appealing HMRC’s determinations for all six.
The first four years were conceded by HMRC before the hearing, due to the work being carried out under a contract to which he was personally party (not his company), and so were deemed to be outside the scope of IR35 – similar to the Gary Lineker case.
This then left December 2019 onwards for the FTT to decide, with the decision being that payments related to Robson’s “image rights” were outside IR35, recognising them as commercial income not derived from employment (more on this later). However, and more notably, payments for his ambassadorial services during this period were deemed inside IR35.
Key factors that impacted the decision
The FTT’s decision regarding Robson’s ambassadorial work hinged on several factors:
- Financial dependence on one client: Robson’s limited company derived the bulk of its income from the club, with little to no work carried out for other clients during the same timeframe. This financial dependency was a key factor in HMRC’s argument.
- Substitution: The contract did not contain a substitution clause and all work had been personally performed by Robson, with the role dependent on his unique identity and reputation.
- “Part and parcel”: With his long-standing association with the club, Robson’s services were integral to the club’s activities, playing a key role in building relationships with sponsors and fans.
- Control: While Robson had some autonomy in how he performed his duties (e.g. no scripts and freedom to respond to questions as he saw fit), there were predefined timetables and instructions for events. The club determined which boxes he visited and when he appeared on the pitch. The FTT emphasised that even without real-time supervision, the club had a “sufficient framework of control,” akin to what is seen in roles requiring specialist skill or knowledge, where direct oversight is impractical but control exists in planning and structure.
- Mutuality of obligation (MOO): MOO existed within the overarching contract, with Robson required to perform a minimum number of appearances per year, combined with regular fixed payments.
Image Rights = “commercial income”
One positive in all of this for Robson was the FTT’s recognition that payments relating to his “image rights” fell outside the scope of IR35.
The FTT acknowledged that the image rights payments represented commercial income rather than remuneration for employment-like duties. This distinction hinged on the structured licensing agreement that allowed Manchester United to use Robson’s image for promotional purposes, independently of his ambassadorial work. The value of these rights lies in Robson’s reputation and iconic status as a former footballer, which the club leveraged to strengthen relationships with sponsors and fans.
The FTT has directed both parties to determine the portion of Robson’s £300k per year earnings attributable to image rights (which will not be subject to deemed employment taxes), and to calculate the tax due on the remaining income, so how much this will reduce Robson’s tax bill by is not yet known.
Takeaways for Contractors and Engagers
Whilst most contractors may not be able to relate to the image rights aspect, this case offers valuable lessons for contractors working through limited companies, and organisations who engage them.
Main takeaways:
Importance of the written contract
The judge reinforced a common theme seen in recent IR35 cases, such as the Stuart Barnes ruling: the written contract is always the starting point for determining the hypothetical contract required by IR35. Even if your working practices are undeniably outside IR35, a contract that contradicts them can put you in hot water. It’s absolutely essential that your contract aligns with your practices, and together they must clearly demonstrate an outside IR35 position.
Long-term engagements with one client increase risk
Like in other recent cases, the length of Robson’s engagement with Manchester United worked against him. Long-term contracts, especially when paired with financial dependency on a single client, make it easier for HMRC to argue that a contractor is “part and parcel” of the client’s business. Contractors should avoid long-term, open-ended engagements where possible, or ensure the contract contains provisions that highlight the independence of the arrangement, such as the ability to take on other clients.
Diversify your client base
Robson’s financial dependence on Manchester United played a significant role in HMRC’s argument. Wherever possible, contractors should aim to act like real businesses working with multiple clients, rather than becoming financially dependent on one.
Finally, be prepared
This is another case that highlights HMRC’s ongoing focus on high-profile IR35 disputes, but the principles apply to all contractors. A well-drafted contract, supported by evidence of independent working practices, is your first line of defence and will put you in the strongest position possible in any IR35 challenge.
The full judgment for the case can be read here.
