Former England Footballer Bryan Robson has won the majority of his appeal to the First-tier Tax Tribunal for services provided to Manchester United Football Club as a Global Ambassador from 2015/16 to 2020/21 via his company, Bryan Robson Limited. The case concerned the IR35 legislation and whether Robson was working as a deemed employee for Manchester United.
Robson appealed all six tax years, of which the first four years and 8 months were fully allowed, leaving 16 months from 03 December 2019 to 06 April 2021, during which a proportion of his earnings should have been treated as deemed employment. The tribunal has directed the parties to agree and set aside part of his earnings, which constitute fees for image rights, and, for the rest, decide on the quantum of the extra tax due under the IR35 rules.
Commenting, Dave Chaplin, CEO of IR35 compliance firm IR35 Shield, who attended the hearing, said:
"Robson is now a member of another unfortunate club, the "IR35 Decade Club" of individuals who, due to the unworkable IR35 legislation, were left in a position of tax uncertainty, almost 10 years after his services were provided.
"If the appeal was a football match, the final score is akin to a 5-1 victory to Bryan Robson. There's a relatively small amount of tax to pay, which is unlikely to cover HMRC costs of investigation and litigation."
Background to Bryan Robson Limited v HMRC
Bryan Robson, nicknamed "Captain Marvel", is a former professional football player who played for Manchester United Football Club ("MUFC") from 1981 to 1994 and England from 1980 to 1991, captaining the national team from 1986 to 1991. After leaving MUFC, he took on various roles at Middlesbrough Football Club, Bradford City Football Club, and Sheffield United Football Club, and he was the assistant manager of England.
His company, Bryan Robson Limited ("BRL"), was incorporated on 2 June 1981, with himself and his wife as sole directors and shareholders, which he used as his vehicle for commercial work outside of his player or manager roles. The IR35 legislation, which HMRC claimed applied, came into force 19 years later, in April 2000.
The BRL accounts for the year-end 30 June 2023 show a balance of shareholders' funds of £28,216, indicating that the historic earnings via his company have already been subject to corporation tax and dividend taxes after distribution - amounts which can be used to offset any IR35 tax bill.
The Ambassador contract with MUFC was for £300,000 per year for a combination of image rights and a minimum of 70 personal appearances, ranging from being a host on match days, participating in press conferences, stadium tours, or travelling overseas.
Chaplin says: "It is notable that by 2019, due to changes in tax legislation, the tax regime for individuals using personal services companies was not particularly advantageous compared to being paid as an employee, particularly for those earning circa £300,000 a year."
Summary of the Bryan Robson decision
The Bryan Robson IR35 tax case decision is unusually long (118 pages). It is highly fact-sensitive, the first case involving a detailed discussion of image rights and whether they should be taxed under the IR35 regime.
Key points from the decision:
- The first four years and part of the fifth year being appealed were conceded by HMRC shortly before the hearing due to the earlier contracts between direct engagements between MUFC and Bryan Robson personally – the exact reason why Gary Lineker won his IR35 case.
- Bryan Robson was ruled to be a "deemed employee" for the 16 months from 03 December 2019 to 05 April 2021.
- The tribunal agreed that the £300,000 annual fees partly consisted of image rights, which were not subject to the IR35 legislation – an amount the parties need to seek agreement on, which the judge opined had "considerable value" and "was central to the contract between MUFC and the Appellant."
- Whilst BRL's earnings were mainly from MUFC, the tribunal found that the absence of other engagements was attributable to Mr Robson's personal choice and not to a shortage of opportunities to work for others.
- The tribunal applied the 3-stage test in Ready Mixed Concrete and found that the necessary (but not sufficient) basic mutually existed (payment for work) together with the existence of a "framework of control" was present, noting that the initial bar for control is "…to ask whether control exists" thereby requiring the tribunal to consider the multi-factorial status test, including the sufficiency of mutuality, extent of control, and all other factors.
- Upon reviewing all factors and taking a steer from the case of The Commissioners for His Majesty's Revenue and Customs v S & L Barnes Limited [2024] UKUT 262 (TCC), the tribunal considered that the factors pointing towards deemed employment outweighed the factors pointing towards self-employment.
Judge Beare concluded, "In my opinion, that is a picture of an employment relationship, albeit one where the employee was given a measure of autonomy in the way in which the services were provided."
Primary lesson – contracts are crucial
The case was a First-tier Tax decision, and as such, none of the decisions form legal precedents binding on future tax tribunals. The judge drew heavily on the settled case law from both the upper-tier and Court of Appeal decisions in Atholl House Productions v HMRC ("Atholl"), the principles of which were ratified in September 2024 by the Supreme Court in Professional Game Match Officials Limited v The Commissioners for Her Majesty's Revenue and Customs [2024] STC 1682 ("PGMOL").
The decision summarised the body of case law on how IR35 cases should be considered, stating that the question of whether an engagement is one of deemed employment "…is to be determined by applying a multi-factorial test, taking into account the terms of the hypothetical contract and the circumstances in which the hypothetical contract arose" and that "the terms of the hypothetical contract are central to the enquiry and necessarily the starting point in the enquiry."
The judge had determined that the "terms of the actual contract, in this case, were the terms of the Ambassador Agreement and that all of those terms were enforceable in law" and are "required to be taken into account in determining the terms of the hypothetical contract" whilst also observing that "the way in which Mr Robson carried out his duties as an ambassador…. in practice was not entirely consistent with the express terms of the agreements."
Chaplin says: "In status cases, the contracts are crucial and take precedence over how the parties may have behaved. I cannot stress more how important it is to pay careful attention to drafting contracts to alleviate unnecessary future issues that may arise. Had the contracts been drafted to closer align with the reality of the engagements, BRL may have fully won the case."