Mr Paulin submitted that the FTT erred in law with respect to the issue of mutuality of obligation, relying on Atholl CA (at paragraphs 46 and 98) for the proposition that an irreducible minimum of mutuality of obligation and control must be satisfied before a contract of employment could be found to exist.

Mr Paulin argued, at paragraph 7 of his skeleton argument, that the FTT, having found as a fact:

Mr Paulin argued that Mr McCann’s contractual autonomy and free agency were wholly inconsistent with the irreducible minimum for the existence of a contract of employment. Mr McCann was entitled to undertake work as the interim manager of Dundee FC, at his own sole discretion and without any consultation with Sky during the peak period of the football season.

He argued that the FTT erred in applying HMRC v Professional Game Match Officials Ltd [2021] EWCA Civ (“PGMOL”) and in holding at [121]:

He argued that the present case is in a distinct legal matrix from that under consideration in PGMOL and additionally that as that decision was subject to appeal to the Supreme Court it could not be relied on. The Tribunal erred in taking irrelevant considerations pertaining to potential individual worker’s contracts into account. He submitted that in the present case the FTT failed to place emphasis on the factor of the irreducible minimum of mutuality of obligation, and subsequently fell in error in relying on the Court of Appeal’s decision in PGMOL as providing a legal basis upon which it could construe the contract between the Appellant and Sky as being one in which, pursuant to any hypothetical contract, there would have been mutuality of obligation. When asked to identify where the FTT relied on PGMOL he referred to [99] and the FTT’s finding regarding the failure to provide services.

In oral submissions Mr Paulin argued that the FTT failed to place weight on the fact that the Appellant (through Mr McCann) was able to undertake co extensive engagements parallel in time which, as acknowledged by the FTT, affected his ability to provide services and that this did not amount to a breach of the contract. This is counter to a mutuality of obligation. He also argued that the FTT erred in considering that Mr McCann engaged directly with Dundee football club at [92] and that this indicates a lack of care and the wrong approach taken by the FTT.

He drew our attention to the invoices, issued by the Appellant, arguing that it is clear that the Appellant was providing services to different entities at certain times (p61-63 and paragraph [88] for example). This is inconsistent with mutuality of obligation. He also emphasised the fact that no invoice had been submitted in May 2017.

In relation to the contract between Sky and the Appellant Mr Paulin argued that there was no obligation on the part of Sky to provide work – he referred to the contract at p21 which clearly indicates that the assignment was on an “ad hoc” basis. There similarly was no obligation on the Appellant to provide services. The whole point of mutuality of obligation is that the master agrees to provide work and the servant agrees to provide services. The contract is, he submitted, entirely inconsistent with the required mutuality of obligation.

Mr Paulin submitted that when the appellant failed to provide services in May 2017, the FTT did not ask the question as to why this was not a breach of contract. The FTT erred in failing to make a finding regarding what he described as the mysterious appearance of Mr McCann in May – it may have been pro bono. It is not clear on what basis he appeared. He also argued that the regularity of a fee structure is not indicative of itself that a contract of employment exists. He argued that the FTT failed to analyse the relevance of the co-existence of contracts with several other companies and of the fact that the Appellant was a business providing business services on its own account.

Mr Anderson referred to the test in RMC. He emphasised the limited scope to interfere with an evaluative judgment of the FTT referring to Red White & Green Ltd v Revenue & Customs Commissioners [2023] UKUT 83 (TCC) (“Red White and Green”) at [36]-[37].

In relation to the argument that “Mr McCann was entitled to undertake work…at his own sole discretion and without any consultation with Sky” he submitted that this was not a fair characterisation of the evidence because i) Mr McCann did not want to burn his bridges with Sky [58], ii) he did inform Sky in advance of taking the Dundee interim appointment [92], iii) Mr McCann’s work as an interim manager for Dundee was consistent with his restrictive covenants and the approach of the Appellant and Sky to seek mutual agreement [95], [99] and [134], iv) Mr McCann in fact made himself available to work for Sky during the 6 week period [58] v) the hypothetical contract would have been subject to restrictive covenants [112(10)] and Sky would have enforced its covenants had Mr McCann sought to work for another broadcaster [133(4)].

In relation to the Appellant’s characterisation of the FTT’s findings at [92] and [99], as demonstrating that Mr McCann’s “contractual autonomy and free agency” was “wholly inconsistent with the irreducible minimum for the existence of a contract of employment” Mr Anderson argued that this was hyperbole. He drew attention to the FTT’s findings that Mr McCann spoke with Sky in advance of taking the Dundee appointment [92] because he did not want to burn his bridges with Sky [58] and that Mr McCann’s work for Dundee FC did not infringe the restrictive covenants in the Sky contract [95], [99] and [134]. Many employees serve more than one employer; or can be employed by one employer but in business on their own account in relation to other clients - Red White and Green at [137(2)].

Mr Anderson submitted that it was not an error of law for the FTT to bear in mind the conclusions of a Court of Appeal decision which, at the time, represented the most recent appellate guidance. The FTT expressly recognised that PGMOL was dealing with different issues and its conclusion on mutuality of obligation at [123-124] is amply supported by its reasoning. PGMOL was not the basis for the FTT’s evaluative exercise. The FTT [98] held that the contract before it was not merely one for work done. The Appellant invoiced Sky in equal monthly instalments, irrespective of the number of games covered. At [119] it rightly held that an established feature of an employment contract is that the employer is obliged to pay the employee regardless of whether or not the services in question are performed – Atholl CA at [73] and under such contracts, the employer is not required to provide work for the employee in addition to payment of the agreed remuneration. In constructing the hypothetical contract, on the basis of the evidence it had heard, the FTT found that the hypothetical contract would have contained this feature (i.e., of payment irrespective of the amount of work done) of the actual arrangements. Mr Anderson referred to p64 of the bundle which set out the Appellant’s income analysis. He submitted that the overall picture was that payments were made monthly even when outside the football season.

Mr Anderson submitted that there was nothing in the FTT decision to support the notion that Mr McCann mysteriously showed up in May 2017 and may have agreed to undertake work on a pro bono basis. The FTT reasonably inferred that the Appellant could have invoiced for May.

He submitted that there was an obligation in the contract to provide services on an ad hoc basis otherwise, as the FTT found [60], if he was unavailable Sky could terminate the contract. There was an equal obligation on Sky to either provide work or to pay in lieu as evidenced by the fee structure.

The Appellant did not raise the argument, advanced in oral submissions before us, that there was no obligation on Sky to offer any work in the grounds of appeal upon which permission to appeal was granted or in the skeleton argument for the appeal before the Upper Tribunal. It does not appear to have been an argument pursued with any vigour before the FTT. No application to amend the grounds of appeal was made. We deal with it briefly.

In our view it is an argument that is bound to fail given the findings of the FTT. We note that the obligation on an employer is to provide work or in the alternative to provide some sort of consideration in the absence of work – see for example Atholl CA at [73].

The FTT made the following findings:

On the basis of the findings made we consider that the FTT was correct to hold at [119] that an established feature of an employment contract is that the employer is obliged to pay the employee regardless of whether or not the services in question are performed. That proposition is consistent with the holding in Atholl CA, at 73, that under a contract in which the employer is obliged to pay remuneration, the employer is not required to provide work for the employee in addition to payment of the agreed remuneration.

Further, there are other findings of the FTT and clauses in the contracts that are inconsistent with the propositions that Sky was under no obligation to offer any work or Mr McCann to perform any. The FTT found that Sky may terminate the contract with the Appellant if Mr McCann was unavailable to provide services for a period in excess of four weeks (clause 5.1(a) p27). We also note clauses 5.1(b), (d) and (e).

We accept that Mr McCann, as personnel of the Appellant, was entitled to undertake work as the interim manager of Dundee FC without having to obtain approval from Sky. Mr Paulin referred to the findings at [92 and 99] in support of the submission that the relationship was wholly inconsistent with the irreducible minimum for the existence of a contract of employment.

Firstly, discussed further below, an employee may serve more than one employer concurrently. Secondly there were restrictions on work that could be undertaken which is inconsistent with the argument that Mr McCann had contractual autonomy and free agency. As set out by the FTT [14(2)], Clause 2.1 of the contracts restricted the services that Mr McCann (as personnel of the Appellant) could provide prohibiting the supply of services (similar to those supplied to Sky) to any other television and/or radio organisation and/or media, print or betting organisations. Further the NDA, as set out by the FTT at [15(4)], included non-solicitation and non-compete obligations.

In light of the FTT’s factual findings that Mr McCann did not want to burn his bridges with Sky [58], that he did inform Sky in advance of taking the Dundee interim appointment [92], that Mr McCann’s work as an interim manager for Dundee was consistent with the restrictive covenants and the approach of the Appellant and Sky to seek mutual agreement [95, 99], that Mr McCann in fact made himself available to work for Sky during the 6 week period [58] and that Sky would have enforced its covenants had Mr McCann sought to work for another broadcaster [133(4)] we reject the characterisation of the relationship between Sky and the Appellant and/or Mr McCann as one in which Mr McCann had contractual autonomy and free agency. Clearly there were significant contractual restrictions on services the Appellant and/or Mr McCann could provide such that neither the Appellant nor Mr McCann had contractual autonomy or free agency. The findings of the FTT at paragraph 112 regarding the terms of the hypothetical contract are entirely consistent with the above findings.

Linked to the argument on contractual autonomy is the argument that the FTT failed to place weight on the fact that the Appellant (through Mr McCann) was able to undertake coextensive engagements parallel in time.

The FTT found at [134]:

We have already set out paragraph [88] above in which the FTT noted that the Appellant had invoiced Sky during April 2017 whilst services were being supplied to Dundee FC.

To a very limited extent during the periods under appeal the Appellant provided services on occasion to other clients. The FTT was aware of this as is clear from [91]. The vast majority of the Appellant’s, and as personnel Mr McCann’s, income arose solely from the services supplied to Sky. Mr Paulin sought to rely on the invoices to clients other than Sky as supporting his submissions. In the years under appeal in years 13/14, 14/15 and 15/16 the Appellant had no income other than from the services supplied to Sky. In 15/16 there was a total of £500 invoiced to two other clients out of a total income of £132,166.64 and in the year 17/18 (including the Dundee FC period) slightly over half of the total income of £61,299.99 was in relation to Sky.

An employee can serve more than one employer or can be employed by one employer but be in business on their own account in relation to other clients as recently affirmed in Red White and Green [137(2)]. The weight to be placed on evidence is generally a matter for the Tribunal that has heard and evaluated the evidence that was put before it. The Upper Tribunal should be slow to interfere with an evaluative judgement of the FTT. In our view there is plainly no error in the FTT’s decision, on the facts of this case, in terms of the weight it placed on the fact that the Appellant provided limited services to other clients concurrently with services to Sky.

We reject Mr Paulin’s argument that the FTT erred in failing to ask the question as to why, if Mr McCann failed to provide services, this was not a breach of contract and that it erred in failing to make a finding regarding the mysterious appearance of Mr McCann in May. The FTT found that Mr McCann did appear on Sky broadcasts in April and May 2017 [58] (during the time the Appellant had entered into a contract with Dundee FC). It also found that the dates on which Mr McCann provided his services were reached by mutual agreement. There was no obligation on the FTT to make a finding on breach of contract in light of those factors and the FTT were not invited to do so by the Appellant’s representative. The FTT was not given any evidence as to the basis upon which Mr McCann appeared on Sky broadcasts in May 2017 (nor was it given evidence as to the April appearances). We consider that the FTT was under no obligation to make a specific finding as to the basis on which he had appeared - in the absence of evidence any such finding would be purely speculative. The inference drawn by the FTT that the Appellant would have been entitled to submit an invoice for May 2017 is reasonable based on the evidence particularly given that an invoice was submitted for April 2017 in similar circumstances.

Regarding the argument that the FTT erred by relying on PGMOL we do not accept that it would be an error of law for a FTT to rely on a decision of the Court of Appeal in circumstances where that decision is subject to appeal to the Supreme Court. The FTT is bound by such a decision if it is relevant to the circumstances in the appeal before it. The FTT expressly recognised that PGMOL was dealing with different issues around individual engagements and overarching contracts. Mr Paulin referred to the FTT’s conclusion at [121]. When pressed by the Tribunal as to where the FTT had incorrectly applied PGMOL he referred to the findings in [99] regarding the failure to provide services.

The context in which the FTT referred to PGMOL is relevant. The Appellant’s representative had made submissions regarding the essential requirements for mutuality of obligation to exist, recorded by the FTT at [116]:

After setting out a paragraph from the Court of Appeal’s decision addressing mutuality of obligations the FTT set out:

In our view, if there was any reliance on PGMOL, it was simply to lend support to the rejection of the Appellant’s submissions as set out in [116] – this can be seen from [122] which immediately follows [121] relied on by Mr Paulin. In relation to [99] (set out earlier) we have already dealt with the findings contained in this paragraph above. We do not discern any reliance on PGMOL in this paragraph. We agree with HMRC’s submission that the FTT’s evaluation and conclusion on mutuality of obligations at [123-124] is amply supported by its reasoning and PGMOL was not the basis for the evaluative exercise.

We reject the argument that there was a lack of care evident from the FTT decision and that it adopted the wrong approach as indicated by it considering that Mr McCann engaged directly with Dundee football club [92]. Whilst it is correct that the Appellant entered into a contract with Dundee FC not Mr McCann this paragraph must be read in context. At [90] the FTT had summarised Mr McCann’s evidence concerning his role at Dundee FC and the comment at [92] was simply following that summary. The FTT’s decision is detailed and carefully considered.

For the above reasons we find there is no error of law in the FTT’s analysis and conclusions on mutuality of obligation.

Mr Paulin submitted that the FTT erred in law by failing to take into account and/or properly apply the third limb of RMC. He argued that the FTT erred by failing to take account core and salient provisions of the actual contract. A number of specific clauses in the contracts were referred to including a number of “indemnity” clauses:

Mr Paulin argued that the above onerous and extensive contractual obligations are prima facie inconsistent with a contract of employment and ought to have been considered in construing the hypothetical contract.

Mr Paulin submitted that the FTT was obliged to consider the totality of the actual contract as a matter of law in the process of then going on to consider the terms of the hypothetical contract. He argued that it would be prima facie unfair for a Tribunal to ignore specific clauses in the actual contract in undertaking its judicial determination of the hypothetical contract when such clauses and contractual terms are of obvious evidential weight and relevance. He relied on Michael Burgess & Ors v The Commissioners for Her Majesty’s Revenue and Customs [2015] UKUT 0578 (TCC) (at paragraph [36]):

In amplifying the grounds of appeal Mr Paulin argued that the Appellant had a contractual right to substitution and the indemnity clauses applied to any substituted company or person. When considering the third limb of RMC the actual contract included such liability on the part of the Appellant. He referred to paragraph 84 of Pimlico Plumbers Ltd v Smith [2017] EWCA Civ 51 (“Pimlico Plumbers”) arguing that an unfettered right to substitution is inconsistent with an undertaking to do personal service. He stressed that the relevant consideration of the general indemnities was against any personnel provided and any subcontracts. He argued this amounted to a cascading series of indemnities that the FTT was required of its own motion to consider. He argued that it was inconsistent with a contract of employment for the Appellant to enter into such indemnities. He submitted that the FTT accepted at [85] that substitution could happen. Mr Paulin, when pressed, rowed back from the submission that an indemnity clause is prima facie inconsistent with a contract of employment.

Mr Anderson submitted that the FTT’s approach was consistent with the guidance in Atholl CA at [122]-[124].

In relation to the clauses in the contract relied on by the Appellant Mr Anderson argued:

In relation to the indemnities Mr Anderson argued that insofar as clauses 1.6, 2.3, or 3.4 involve the Appellant providing an indemnity to Sky in relation to claims arising out of employment, there is within the contracts a recognition that the parties’ attempted characterisation of the relationship may not be correct. The Appellant has not suggested that the intermediary indemnity provisions could or would have formed part of the hypothetical contract between Mr McCann and Sky. As the hypothetical contract is a direct contract between Mr McCann and Sky a term of the actual contract involving a third-party indemnity could not translate into the hypothetical contract.

Regarding Clauses 3.3 and 3.4. the FTT accepted that, in the hypothetical contract, Mr McCann would have no entitlement to holiday pay beyond his statutory rights. As per Kickabout [2022] EWCA Civ 502, [2022] at [97] there was no misdirection or error of law in the FTT’s decision in this respect.

Regarding Clause 5.1. the termination provisions were considered by the FTT [14(6)]. Mr McCann accepted that if he were not to make himself available for a period of four weeks, Sky would ask questions and may exercise its right to terminate FTT [60]. It was not a matter left out of account.

As set out above permission to appeal was refused in relation to the FTT’s findings on substitution (there being no substitution clause in the hypothetical contract). We have therefore disregarded the submissions made by Mr Paulin insofar as he relied on indemnities in relation to any substitution and we therefore do not need to refer to the point Mr Paulin relied on in Pimlico Plumbers.

The Appellant was represented before the FTT and whilst we accept that the FTT was required to consider the totality of the contracts between the Appellant and Sky it was not required to set out every single clause that it had considered particularly where such clauses were not relied on by the Appellant.

Mr Paulin accepted before us that indemnity clauses are not prima facie inconsistent with a contract of employment.

We agree with HMRC’s submission that the indemnity clause in 1.6 would not translate directly into the hypothetical contract to which the intermediary is not a party. Any such indemnity would be required to be expressed in terms of a direct contract between Mr McCann and Sky. We do not consider that had this clause, in a modified form, been included in the hypothetical contract it would be per se inconsistent with a contract of employment and neither do we consider that it is of obvious evidential weight and relevance such that the FTT was bound, of its own motion, to refer directly to it when it was not a clause relied on by the Appellant.

Clause 1.4 is irrelevant given that no substitution clause is included in the hypothetical contract. Clause 1.5 was considered by the FTT [15-16, 52,89] and in relation to Mr McCann an NDA clause is included in the hypothetical contract.

In relation to Clauses 2.3, 3.3 and 3.4 (p24 and [42]) the FTT considered these provisions [112(6)], [133(5)]. An express clause disavowing the existence of an employment agreement or mutuality of obligation and “workers’” rights will not normally count greatly in the balance – see paragraph [92] Kickabout. The FTT [133(5)], on the facts of this case, was entitled to conclude that no weight should be placed on the statement.

Regarding Clause 5.1. the termination provisions were considered by the FTT [14(6)]. It was not a matter left out of account. Although Mr Paulin submitted that this clause is inconsistent with a contract of employment and whilst it would not override statutory rights such as protection from unfair dismissal, no authority was cited to suggest that an unqualified power of termination is incompatible with an employment relationship at common law.

The FTT conducted a thorough analysis of the relevant Clauses in the actual contract and relevant circumstances. In our view it properly directed itself as to the approach to be adopted (see [71-72] and [129-132]) when considering the third limb of RMC. There is no error of law in the FTT’s analysis and reasoning.

Mr Paulin argued that the FTT erred in its application of the three-stage test set out as set out in Kickabout at [6]. He referred to paragraph 82 of the Commissioners for Her Majesty’s Revenue and Customs v Atholl House Productions Limited [2021] UKUT 0037 (TCC) (“Atholl UT”) arguing that the FTT erred in law by incorrectly construing the UT’s ruling and guidance. The Upper Tribunal in Atholl UT was not holding that there could be a “blurring” between stages 1 and 2, as the FTT erroneously held at [70].

He argued that the Upper Tribunal was explaining that it could be appropriate to hold elements of the actual contract “in abstract” while simultaneously considering how the hypothetical contract may be formed from relevant ‘circumstances’ as required by the statutory provisions in question. The Upper Tribunal was issuing a judicial warning that care must be taken to ensure that ordinary principles of contractual interpretation are applied at stage 1, because any error in that respect could “infect” the ascertainment of the terms of the hypothetical contract at stage 2.

Mr Paulin submitted that the FTT erred by; i) failing to take care to ensure that ordinary principles of contractual interpretation were correctly applied at Stage 1, ii) wrongly construing the terms of the actual contracts and iii) permitting such errors to infect the ascertainment of the terms of the hypothetical contract at Stage 2.

He argued that the errors are evident in the FTTs self-direction at [70]. The FTT erred by presupposing that it could blur and conflate the process of identifying whether there was a relationship of employment by virtue of the terms of actual contract made by them, with the subsequent process of construing the terms of any hypothetical contract.

Mr Paulin argued that at [99] the FTT analysed the fact that Mr McCann was employed as interim manager of Dundee FC for a six-week period. He submitted that the Appellant did not provide Sky with any substantive services in May 2017 and so no invoice was raised. Yet, in construing the terms of the actual contract, and before the FTT went on to consider the terms of the hypothetical contract it held that: “we consider that MML would have been entitled to submit a similar invoice in respect of May 2017”. The Tribunal thereby ruled as to the terms of the actual contract based on a hypothetical term that had no basis. The FTT reverse engineered the terms of the actual contract by considering what “would” have been the Company’s contractual right. It is submitted that this error renders the FTT’s decision irredeemably incorrect as a matter of law and that such an error is a fundamental one.

In his oral submissions in response to questions from the panel as to where, other than at [99], the FTT blurred the construing of the actual and hypothetical contracts, he referred to [73 to 88] arguing there is a paucity of references to the actual words of the contract and in glossing over the terms in [88] by using the term “would” demonstrates how the FTT blurred the stages.

Mr Anderson submitted that the FTT was directed to the UT’s decision in Atholl UT which the FTT quoted at [69]. He argued that the three stage Kickabout process is a “helpful structure” and that the observation in Atholl CA (at [72]) that the three limbs of the RMC test are not “an exhaustive and immutable test” apply with equal force to the three stage Kickabout test.

Mr Anderson argued that the principal ground of attack appears to be focussed on the FTT’s reference in [70] to a “blurring” between the stages of analysis and the reference to “would” in [99]. He submitted that the FTT has simply recognised that step 2 must be informed by what has been found at step 1 because that is what s 49(4) ITEPA requires. On orthodox principles, the proper construction of the terms of a written contract is an iterative process - Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173 at [11]-[13]. In any event the FTT did clearly carry out a thorough analysis of each stage. He argued that on entirely orthodox principles, the FTT [98-99] found that, on the actual contractual arrangements, the Appellant had a contractual right to invoice for the single month in May 2017. That was a perfectly proper finding. It reflected the position under both contracts that the annual fee was payable in equal monthly instalments.

He submitted that this ground appears to be an attempt to identify a misdirection by way of the sort of narrow textual analysis that has been deprecated at the highest levels - Volpi v Volpi [2022] EWCA Civ 464, [2022] 4 WLR 48 at 2(vi) and authority there cited, Red White & Green at [35]-[36]. The FTT correctly and fully addressed each stage of the test - Stage 1 at [73-100] and Stage 2 at [101-112]. In relation to the hypothetical contract, the FTT considered the content of that contract separately and distinctly from the actual contract.

Mr Anderson submitted that the reference to “blurring”, or the use of a conditional “would” do not amount to any error of law and on no view can it be considered that they amounted to a fundamental misdirection or misunderstanding of the position and still less would any infelicity of language render the FTT’s decision in this case “irredeemably incorrect”.

The two essential points relied on by Mr Paulin were the use of the word “blurring” and the word “would”. Although Mr Paulin, in oral submissions, attempted to bolster this ground by inviting us to find that the paucity of references to the actual words of the contract in [73-88] and the glossing over the terms in [88] demonstrates how the FTT blurred the stages he failed to provide any specific examples other than the two points identified.

The FTT at [69] set out paragraph [8] of the decision in Atholl UT including sub paragraph 8(2):

At [70] the FTT said:

From [73] the FTT considered the actual contractual arrangements having described the written terms earlier in its decision. We do not accept that there is a paucity of reference to the actual terms of the contract – the FTT did not need to set out again in these paragraphs the written terms that the FTT had set out and considered from [8-17]. We can see no evidence of blurring in [73-88]. In [88] (and similarly at [99]) the FTT concluded:

The FTT was considering the actual contract. Its finding that, if the Appellant had submitted an invoice for May 2017, it would have been payable is not a reference to the hypothetical contract. The use of would in this context is simply a reference to the contractual obligation arising under the terms of the actual contract if they were enforced.

We discern no error of law in the FTT’s approach. Whilst the use of the term “blurring” may not be an apt description of the Upper Tribunal’s observations in Atholl UT the FTT clearly understood the import of those observations. In this case the FTT appears to have deferred analysis of the hypothetical contract until after it determined the terms of the actual contract.

For the above reasons we find that there is no error of law in the FTT’s decision. The appeal is dismissed.