HMRC has notched up yet another IR35 win in the media industry, as former Liverpool and England footballer Phil Thompson lost his appeal at the Upper Tribunal. The result has left Mr Thompson stuck with a tax bill of nearly £300,000, covering PAYE and NIC liabilities for work undertaken as a pundit for Sky Sports between 2013 and 2018.
Thompson provided services through his company, PD & MJ Ltd, primarily on Sky’s Soccer Saturday programme. The appeal, heard in January 2025, followed a First-tier Tribunal (FTT) decision in December 2023 which had already ruled in HMRC’s favour.
Grounds of Appeal
Thompson appealed the FTT’s decision on four grounds:
- The FTT’s interpretation of the actual contract between the Appellant and Sky was
wrong in law. - The FTT’s identification of the terms of the hypothetical contract was wrong in law.
- The FTT’s decision as to whether the necessary framework of control existed was wrong in law.
- The FTT’s application of the third stage of the employment test was wrong in law.
Upper Tribunal: No errors of law, and FTT decision stands
The Upper Tribunal (UT) found no material error in the FTT’s reasoning, concluding that the hypothetical contract between Thompson and Sky amounted to one of employment. The UT dismissed all four grounds of appeal, including challenges to the FTT’s construction of the actual and hypothetical contracts and its application of the employment status tests.
Key takeaways from the UT’s decision
- Control – as in so many recent cases, control was central to the decision. Sky held the contractual right to direct Thompson’s services, dictate where they were performed, and restrict him from working for other broadcasters. The UT agreed that this framework of control strongly indicated employment, making clear that even skilled professionals can still be subject to sufficient control to indicate employment (as seen in PGMOL).
- Limited independence – while some arguments were made about the nature of punditry and the freedom to express opinions, Thompson couldn’t freely exploit his own opinions without Sky’s approval. He was also considered closely integrated into Sky’s production, and the hypothetical contract limited his ability to commercially exploit his work independently.
- Financial dependency – despite not taking up the majority of his working time, around 80% of Thompson’s income came from Sky. The UT supported the FTT’s view that this demonstrated a significant financial dependency on Sky.
- Block fees and termination clauses – A “block fee” structure (fixed regardless of air time) was found to be a neutral factor in this case. However, the one-sided termination clause – allowing only Sky to terminate, with Thompson tied in for the duration of the contract – weighed in favour of employment.
Control & financial dependency failed Thompson
This ruling is not surprising, but it is instructive. Mr Thompson’s failed appeal reinforces the idea that working for one dominant client, under a contract that permits significant control and embedment into the client’s organisation, will probably put you firmly inside IR35. The same themes have emerged in other recent IR35 cases, notably those involving Bryan Robson and Stuart Barnes.
Importantly, the UT dismissed the idea that the absence of employee benefits alone could tip the balance in favour of self-employment. The judgment also makes it clear that a contractor’s status cannot be salvaged solely by pointing to peripheral income streams, if the bulk of earnings come from one client.
Final thoughts
IT contractors will not have the kind of public profile seen in this case, however the status tests apply across the board and a lot will likely work with one client at a time. The lessons here are clear – your contract and working practices must withstand scrutiny on control, mutuality, and independence grounds.
The outcome of Thompson’s appeal may not break new ground in legal terms, but it adds further weight to a growing body of cases that reinforce HMRC’s approach to control and dependency. The message is simple: if you walk, talk, and earn like an employee – the taxman will treat you as one.
