The recent IR35 tribunal involving former England and Manchester United captain Bryan Robson underscores the complexities inherent in the UK’s employment status rules. Despite his high-profile status, Robson faced the same legal scrutiny that any contractor or freelancer might encounter when operating through a personal service company (PSC). This case is particularly helpful, as it highlights how HMRC examines both the substance of contractual arrangements and the practical realities of working relationships.
The tribunal’s findings are a clear warning for contractors, freelancers, and consultants: applying IR35 is not a matter of mere legal formality. Rather, it is a detailed and fact-sensitive inquiry that can have significant financial and operational implications. As this case illustrates, proactive management and expert advice are essential to mitigate these risks.
The Tribunal’s decision
At the centre of the tribunal’s analysis was the distinction between the periods of Robson’s engagement with Manchester United, both provided through his company, Bryan Robson Limited (BRL). His work encompassed a substantial annual remuneration of £300,000 and included a minimum of 70 personal appearances per year, along with the club’s use of his image.
Before December 2019
The tribunal concluded that the arrangements before December 2019 were not caught by IR35. This was primarily because the agreements were deemed personal arrangements between Robson and Manchester United, rather than engagements conducted through his company. Consequently, they fell outside the statutory framework of IR35.
December 2019 to April 2021
However, for the period following December 2019, the tribunal found that the engagement exhibited key employment indicators. These included personal service obligations, a lack of genuine substitution rights, and substantial control by Manchester United. These factors led the tribunal to determine that the later contracts fell within the scope of IR35.
Significance of the image rights distinction
A particularly notable aspect of the tribunal’s decision was its treatment of payments made for image rights. These payments were seen to be outside the remit of IR35 because they did not constitute remuneration for personal service. This careful separation underscores the importance of distinguishing different revenue streams in contractual engagements – an area where professional advice can be especially valuable.
Key lessons and practical implications for contractors
The tribunal’s detailed analysis provides a number of important lessons for all contractors and freelancers, whether working in digital industries, professional services, or other specialist fields.
Alignment between contracts and working practices
One of the most significant takeaways is the need for a clear and demonstrable alignment between the contractual terms and the day-to-day reality of working practices. It is not enough to rely solely on well-drafted contractual provisions. If, in practice, the client exercises significant control, dictates the manner in which work is performed, or requires personal service without genuine substitution rights, then HMRC will likely argue that the arrangement is akin to employment.
The importance of substitution clauses and control
The tribunal’s findings highlight the centrality of genuine substitution clauses in defending against an IR35 challenge. Where a contractor cannot send a suitably qualified substitute, or if the client retains an unqualified right of veto, this will likely be seen as an employment indicator. Similarly, the degree of control exercised by the client over what work is done and how it is completed can determine whether IR35 applies.
The impact of client dependency
In this case, Robson’s reliance on a single client also influenced the tribunal’s decision. Contractors who derive most of their income from a single client are more vulnerable to an IR35 challenge, as this can suggest a level of financial dependence more consistent with employment. Diversification of the client base, where possible, is an important practical step that can help mitigate this risk.
Treatment of distinct revenue streams
The tribunal’s treatment of image rights payments also underscores the need to carefully separate distinct revenue streams in contractual arrangements. Payments for services that fall outside the scope of personal service, such as those for licensing intellectual property or image rights, must be clearly identified and supported by robust, commercially justifiable arrangements. This is an area where professional input can make a material difference.
The Importance of professional advice and proactive compliance
As recent cases have shown, the financial and operational risks associated with an adverse IR35 determination are significant. Beyond the immediate tax liabilities, contractors and freelancers may face substantial penalties and interest charges, as well as potential reputational damage. In some cases, these risks can even threaten a business’s viability.
Engaging experienced tax and legal advisers is essential to effectively navigating these challenges. Professional advisers can provide critical insights into contract drafting and working practice alignment, helping to ensure that engagements are genuinely structured to support self-employment status. Regular reviews of contractual arrangements and ongoing monitoring of day-to-day practices are also indispensable in maintaining compliance.
Moreover, the legal landscape around IR35 continues to evolve, with new tribunal decisions and HMRC guidance shaping the practical application of these complex rules. Staying informed and up to date on these developments, particularly in light of the tribunal’s nuanced findings in the Robson case, remains a key priority for any contractor or freelancer operating through a PSC.
What to expect going forward
The tribunal’s decision in the Robson case also highlights HMRC’s increasingly assertive approach to enforcing IR35 compliance. HMRC has made it clear that it will continue challenging arrangements that blur the lines between genuine self-employment and disguised employment. High-profile cases such as this are emblematic of a broader strategy to ensure compliance across all sectors, not just in high-visibility industries like sport and entertainment (although these cases do tend to grab the headlines).
Going forward, contractors should anticipate ongoing scrutiny from HMRC. This could include using advanced data analytics to cross-reference payment records with other data sources and reviewing work patterns to detect signs of disguised employment. In this environment, robust documentation and clear, compliant working arrangements are essential.
In addition, legislative updates, policy changes, and further tribunal decisions will continue to shape the evolving landscape of IR35 compliance. Against this backdrop, proactive management and professional oversight are key to ensuring that contractors remain protected and fully compliant.
Conclusion: The necessity of strategic planning and vigilance
The Bryan Robson tribunal case is a clear reminder that IR35 is not just a technical tax matter. It significantly affects how contractors and freelancers manage their businesses, finances, and long-term planning. Even the most carefully drafted contracts are of limited value if they do not accurately reflect the reality of the working relationship.
For those operating through a PSC, the lessons are unmistakable: proactive management, informed decision-making, and regular professional reviews are essential to maintaining compliance and avoiding serious financial and reputational damage.
At Wilkins Southworth, we specialise in providing tailored, expert advice to help contractors and freelancers navigate the complexities of IR35. From thorough contract reviews to practical assessments of working practices, we ensure your arrangements are compliant and aligned with your business objectives.
If you are concerned about your current arrangements or wish to review your IR35 status in light of this tribunal decision, we encourage you to contact us. Let us help you protect your contracting business and ensure you remain fully compliant.