Former tennis pro faces IR35 bill after adviser misses appeal deadline

Service fault by representative sees Sky Sports pundit's IR35 appeal turned down

Barry Cowan, a former tennis player turned Sky Sports pundit, has lost his chance to appeal an IR35 case after an advisory blunder.

The appeal would have contested the finding of an IR35 investigation, which HMRC delivered its decision on in 2021. During the investigation, HMRC set out its view that Cowan should have been treated as an employee for tax purposes (inside IR35) when working on contracts held with Sky Sports between 2014 and 2019.

Cowan and his representatives were informed of this decision via a ‘view of the matter’ letter issued by HMRC. Crucially, the letter also clearly set out that they had 30 days to request an appeal or accept the tax office’s offer of an internal review.

Whether Cowan would have been found inside or outside of IR35 at appeal is irrelevant – as his advisers failed to request an appeal in time. Instead, they argued with HMRC via email, demanding responses to a number of points raised in dispute with HMRC’s position, missing the deadline. 

Under these circumstances, the right to appeal can only be granted at tribunal; Cowan’s request was heard at a first-tier tax tribunal on the 21st March 2023.

However, tribunal judge Amanda Brown KC was “not persuaded to grant permission” to appeal. This was because – in the correspondence between HMRC and Cowan’s representative – “it was clear that HMRC considered the time limit to have expired”, according to the case notes.

“Rather than seek to remediate the position as soon as possible the representative continued to lock horns with what he considered to be the outrageous conduct of HMRC,” Brown said. 

The judge also said that “the Applicant’s representative simply expressed increased frustration and indignation at HMRC’s conduct without considering what course of conduct would represent his client’s best interests.”
 

HMRC continues to target presenters, pundits and commentators

Cowan is one of a number of high profile pundits and commentators who have held contracts with Sky and also been subject to an IR35 investigation in recent years. 

Alan Parry and Stuart Barnes also both endured protracted IR35 investigations. Parry lost his case in July 2022, leaving him with a tax bill of over £350,000. However, Barnes was successful in his IR35 appeal in January of this year, overturning a tax bill worth almost £700,000.

Over the years, HMRC has also targeted several other presenters, including Lorraine Kelly, Gary Lineker and Adrian Chiles; who all successfully contested their cases. Others, such as Eamonn Holmes, have failed in their appeals – and been hit with large tax bills as a result.

Michael Lynagh, another Sky Sports commentator, also lost his case in similar circumstances to Cowan, with his advisers also failing to lodge the appeal within the deadline specified by HMRC. 

Speaking to Business Matters, Qdos CEO Seb Maley said Cowan’s case highlights the need for “support you can count on”, as “IR35 cases can carry millions in tax liability and HMRC is noticeably ramping up its compliance activity”.

What does this case mean for contractors?

This case was opened prior to the introduction of the off-payroll working rules, however it’s worth noting that contractors can still be subject to IR35 investigations – whether for engagements completed before the rule changes or when a contractor is engaged by a small business.  

Additionally – and given that the Cowan case is the second time that a contractor’s advisers have missed important deadlines – it’s important that you have expert support in the event of an IR35 investigation. 

Finally, holding a comprehensive IR35 insurance policy will protect you in the event of a tax investigation, giving you the support of an expert when you need it most.