Fighting IR35? It’s futile if the 30-day statutory time limit to appeal HMRC’s decision is missed, à la Cowan

Earlier this summer, another IR35 judgment involving an individual in the public eye surfaced.

As I’ll go on to explain, though, in many ways, that’s where the similarities end between Sky Sports tennis pundit Barry Cowan -- who was at the centre of the case -- and the many other TV presenters who have endured their own IR35 sagas before him, writes Seb Maley, CEO of IR35 contract review firm Qdos.

The Barry Cowan case wasn’t the same old, same old IR35 presenter case

One could argue that several of those other high-profile individuals who publicly lost their IR35 status battles were worse off, with the finer details of IR35 their undoing, such as whether they had the right to provide a substitute and how much control their client had over the service provided. Cowan’s is a different story and in my view, it’s an even crueler one.

That’s because Cowan lost the right to appeal HMRC’s view that he’d been incorrectly operating outside the scope of IR35.

The reason? An error was made by his representative.

In particular, his defence missed the deadline to submit an appeal to challenge the stance taken by HMRC in 2021, which was that the presenter was operating as a ‘disguised employee’ when engaged by Sky Sports.

A sad, cruel fate

It’s a sad tale of a series of unfortunate events that ultimately leave Cowan carrying the financial can. You can’t help but ask -- was HMRC’s view of his IR35 status correct? Or was Cowan genuinely self-employed?

As it stands, we’ll never know. It’s irrelevant. And that’s why it’s so very cruel.

But before I focus on the bigger picture of this broadcaster who never got to fight over his IR35 status in court, as he intended to, I’ll outline the details of this quite extraordinary case.

Cowan V HMRC over IR35 went like this…

HMRC was pursuing Cowan for contracts held between Sky and his LLP, Cranham Sports, in the 2013/14 and 2018/19 tax years.

The tax office issued this determination on June 18th 2021, with Cowan’s representative contesting this a few weeks later on July 9th.

However, there was no explicit request for an appeal from Cowan’s side -- rather, the reply to HMRC in July contained the reasons that the defence believed the presenter wasn’t inside IR35.

An email rally, (no) request, and (no) good reason

Next came a back and forth -- or perhaps more aptly, a rally of emails -- between Cowan’s representative and HMRC. But still, no formal request for an appeal. It wasn’t until March 9th 2022 that this was made, which was two months too late.

Following this, a late application to appeal was lodged by Cowan’s team, which was roundly rejected by the First-Tier Tribunal -- there was “no good reason” for “serious and significant delay” in requesting that appeal, the FTT judge said back in April 2023.

More recently, the second appeal, heard at the Upper Tribunal in June 2024, also failed -- which is why this case is back in the public eye.

Where does this leave Cowan?

Most likely, Cowan will be left to foot an IR35 bill that, for all we know, he may have been incorrectly handed by HMRC. There’s no ‘next step’ or way of escalating this case, following two failed attempts by his defence.

Now, we don’t know the amount of tax at stake here, but if other similar IR35 cases involving presenters are anything to go by, it could be significant.

Plus, there’s the reality of Cowan not being able to demonstrate his innocence -- or at least put forward his version of events.

What can contractors learn from Cranham Sports LLP versus HMRC?

To state the obvious, contractors must engage a specialist who understands the ins and outs of HMRC’s appeals process and, vitally, one who will not miss such an important deadline.

I can’t stress this enough.

But for the avoidance of doubt; what deadline am I talking about?

IR35: Deadlines drill-down

Well, it’s the 30-day period a taxpayer is given, after HMRC has issued their final decision. It’s not when that decision has been received by the taxpayer or their representative.

It doesn’t matter how well-versed an IR35 expert is in the legislation, or how well someone can argue their point at the tribunal if the small, but fundamental details such as confirming the intention to appeal, are overlooked.

Be aware, this request for an appeal has to be sent directly to HMRC, which will then offer a review if they don't accept the initial appeal. This review would be carried out by a different officer or HMRC representative. 

The taxpayer can either accept to have that review -- where there's another 30-day window to accept after it is offered -- or can appeal to tribunal at that point.

Final thoughts

It would be easy for me to conclude that this umpteenth IR35 ‘presenter’ case reflects HMRC’s appetite for pursuing contractors. But actually, it’s not the key takeaway here. For once, in my opinion, there’s a bigger story buried in the Cowan case.

And that story shows up at point (45) of the Upper Tribunal’s ruling, which states, in part: “Statutory time limits to be respected”.

I couldn’t put it any better myself.

As hopefully is plain to see -- and not forget, it’s not just HMRC that’s a stickler for deadlines -- the courts are too. Miss them and you can pay a life-altering price.