After almost six years, Gary Lineker has won his £4.9m tax case – a saga which once again highlights the complexities of the IR35 legislation.
The investigation was launched in 2017, with HMRC alleging that the presenter was incorrectly operating outside IR35 across a series of contracts held with the BBC and BT Sport.
The case carried a £4.9m tax liability, which HMRC believed comprised £3,621,735.90 in Income Tax and £1,313,755.38 in National Insurance Contributions.
However, this headline figure would have been offset against the taxes Lineker had already paid over the course of these contracts via his partnership (Gary Lineker Media), reducing the overall liability.
HMRC took the view that this liability was accrued across three contracts held by Lineker; two with the BBC (one running 2013 to 2016 and another 2015 to 2020) and one with BT Sport (from 2015 to 2018).
At a First Tier Tax Tribunal heard from 27th February to 1st March, Lineker’s lawyers argued that the host held a direct working relationship with his clients. There was no intermediary present, his representatives stated.
Ultimately, the Tribunal Judge John Brooks agreed, dismantling HMRC’s approach on the grounds that Lineker had in fact entered into the contracts directly, as both a principal of his partnership but also as the worker.
As such, Judge Brooks said, “the intermediaries legislation (IR35) does not, and cannot as a matter of law, apply”.
Responding to the tribunal result on Twitter, Lineker said “I am pleased that the Tribunal has endorsed my contention that I have not failed to pay any taxes or National Insurance by reason of the IR35 rules.”
Gary Lineker works via a partnership – Gary Lineker Media (GLM) – with his former wife, Danielle Bux.
While agreeing that IR35 is a consideration for partnerships in certain circumstances, Judge Brooks ruled that the contracts in question were held between Lineker and his clients directly.
Operating as the 'principal' of the partnership, Lineker’s services were “provided under direct contracts”. Lineker himself signed the contracts, however, if his Danielle Bux had signed them – on behalf of the partnership – an intermediary would have been present.
Due to these circumstances and, given there was no intermediary involved, the IR35 rules could not be considered. As a result, the key factors typically scrutinised in IR35 cases – such as Control, Personal Service and Mutuality of Obligation – weren’t reviewed.
Although, HMRC is able to appeal and the tax office has 56 days from the date the ruling was announced (28th March) to do this.
Speaking to the Financial Times, an HMRC spokesperson said:
"We do not agree with its decision that the rules cannot apply in this case and we’re considering an appeal. It is our duty to ensure everyone pays the right tax under the law, regardless of wealth or status.”
This was a unique and complex case, carrying significant tax liability.
The fact that Lineker provided his services via a partnership, rather than through a limited company, also raises question marks about HMRC’s fundamental understanding of the legislation and the circumstances in which it applies.
Focusing on the bigger picture, this case demonstrates HMRC’s strategy of pursuing high-profile freelancers, in addition to typical contractors and businesses.
Given the contracts being scrutinised in this case were held prior to the introduction of IR35 reform, Lineker would have been liable.
So this case is yet another reminder that HMRC can and does launch retrospective IR35 investigations into contractors.
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