In Little Piece of Paradise Ltd v HMRC, the First-tier Tribunal (FTT) found that the relationship between Sky and a TV sports presenter was one of a contract of service and therefore dismissed the presenter’s service company’s appeal against Pay As You Earn determinations and National Insurance Contributions notices.
Little Piece of Paradise Ltd v HMRC [2021] UKFTT 369 (TC)
This is the latest in a series of cases involving TV presenters engaged by broadcasters via personal service companies (PSCs). The question was whether, if the presenter had been engaged directly, the hypothetical contract would have been a contract of service (employment) or a contract for services (self-employment). HMRC has won the majority of these cases, and this one was no exception.
There were three contracts in question spanning a six-year period and providing for a fee each year for services to be performed. These resulted in the appellant (LPPL) providing the individual (DC) to the broadcaster (S) as a lead presenter of professional darts. S’s darts coverage extended only to 64 days a year, and these would normally be the total working days resulting from the contracts.
As is now common, it was agreed that the relevant test to be applied, was that set out by Mr Justice McKenna in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. The appellant asserted that there was no mutuality of obligation on the premise that if services were not provided S was under no obligation to make payment. This was not supported by the broadcaster’s own understanding or by what happened in practice. S paid monthly instalments of a fixed annual fee upon the rendering of invoices. Each payment was one-twelfth of the annual fixed fee, even for those months when S did not cover any darts events. In return, DC was obliged to perform the services personally.
S had the ultimate control over what programmes DC would be required to present. Given that the contracts gave S right of first call, DC had to reserve the 64 days. The contracts also contained restrictive covenants to limit what DC could do outside programme hours; he was not free to take up a similar presenting role for another broadcaster.
Having concluded that the two main conditions were satisfied, the FTT did not have to approach the third condition from ‘an evenly balanced starting point’. It considered in turn each of the appellant’s assertions on such matters as exclusivity, whether in business on his own account, holiday and sick pay and the right to provide a substitute. None of these factors proved helpful to DC.
It emerged that in 2018, in response to the proposed new off-payroll working rules that eventually took effect in the private sector on 6 April 2021, the broadcaster informed all its ‘on-air talent’ that they would not be able to engage with them through a PSC in future. The FTT acknowledged that this could be taken as the broadcaster conceding that its contractual relationship with DC should have been treated as under a contract of service, but HMRC could no more rely on this than DC could rely on the fact that he had been treated as self-employed before the interposition of his personal service company.
Why it matters
The fact that HMRC continues to be largely successful in this type of case illustrates the difficulty that presenters associated with a single broadcaster or programme are likely to have. The broadcaster’s response here to the off-payroll working rules suggests there will be fewer of these cases in future.
Case details
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