Phil Thompson is facing a hefty tax bill of around $380,000 following an unsuccessful challenge against HMRC concerning IR35 regulations. The Liverpool legend, now 71, graced the pitch for the Reds almost 500 times during his tenure in the 1970s and 80s, and lifted seven league titles and three European Cups.
Post-retirement, Thompson took up coaching roles at Liverpool under Kenny Dalglish and later Graeme Souness. He eventually became Gerard Houllier’s right-hand man and even managed the team temporarily when Houllier required emergency heart surgery.
The former defender then transitioned to television, featuring as a pundit on Sky Sports’ Soccer Saturday for 22 years until his exit in August 2020.
The TV work he conducted through his company, PD and MJ Ltd, came under scrutiny from HMRC for the period between 2013-14 and 2017-18, with authorities deeming it subject to IR35 — resulting in claims that Thompson owes £294,306 ($380,243) in PAYE (Pay As You Earn) and NIC (National Insurance contributions).
After the First-tier Tribunal dismissed Thompson’s initial appeal on December 11, 2023, he sought recourse at the Upper Tribunal in January, but to no avail; two judges validated the prior decision, finding that no material error of law had occurred.
Seb Maley, CEO of Qdos, remarked on the situation stating: “HMRC pursues a high-profile freelance presenter who has fallen into the trap of working in a way that reflects disguised employment. The result is a staggering tax bill.”
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While discussing the increasing challenges freelancers encounter, IR35 expert at Re Legal Consulting Seeley, Rebecca Seeley Harris, commented: “It is getting more and more difficult to establish yourself as an independent contractor, and the framework of control is becoming the dominant factor again.”
Maley then highlighted: “The bigger picture is that HMRC sees IR35 compliance as a priority.”
These remarks come in the wake of a recent UK government report on IR35 from earlier this month, which revealed that the reforms have generated an extra £4.2 billion ($5.4 billion) in tax revenue.
Nonetheless, there’s a word of caution from specialists who believe that the real impact of these changes “has been continually downplayed”.
* An AI tool was used to add an extra layer to the editing process for this story. You can read the original story in the Liverpool ECHO by clicking here.
