Advisers fail Sky Sports pundit, who lands £230,000 IR35 bill

Former rugby player unable to appeal IR35 case after accountant's costly mistake

Michael Lynagh, a former professional rugby player turned pundit, is due to pay an IR35 bill worth £230,000.

Carrying out occasional work for Sky Sports through his company, MPTL Limited, alongside his full-time job as a Managing Director at Dow Jones, Lynagh was under investigation by HMRC for two years before the tax bill was issued.

The sum comprises unpaid National Insurance Contributions and Income Tax, arising from an investigation which initially began in 2020. After this investigation was completed, HMRC sent its decision to both the registered address of Mr Lynagh’s company and to his appointed advisers, in December 2021.

As part of its decision, HMRC offered an olive branch to Lynagh, suggesting that he could be eligible for overpayment relief and dividend relief, which may have taken the sting out of the decision (though it’s difficult to know by how much this would have reduced the overall tax bill).

However, despite having an opportunity to appeal the ruling, Lynagh’s accountants failed to lodge the appeal by the deadline stipulated by HMRC, according to the FT Adviser.  

As a result, at the tribunal, which was held on 7th December 2022, the judge refused the right to appeal and ruled in HMRC’s favour.

The tribunal judge found that there was an “absence of any good reason for the delay” provided by Lynagh’s accountants. As things stand, this mistake looks to have cost the former rugby professional £230,000.

The outcome of the Michael Lynagh case is yet another example – in a long line of cases – of high-profile individuals being investigated by HMRC.
 

What are the takeaways for contractors?

It’s vital to ensure that you have appropriate protections in place, providing peace of mind in the event that you face an IR35 investigation. 

This case highlights the importance of engaging credible IR35 experts – specialists you can count on when it matters. 

It’s also important to remember that contracts held and completed prior to the introduction of IR35 reform (2017 in the public sector and 2021 in the private sector) can still be investigated by HMRC – and this is a tactic that the tax office is actively using. 

With this in mind, holding a comprehensive IR35 insurance policy protects you in the event of a tax investigation and covers resulting liabilities.

What are the takeaways for businesses?

The Lynagh case is yet another warning sign for businesses that HMRC is ramping up its IR35 compliance activity. 

Following IR35 reform, businesses can face significant tax bills and fines, should the tax office determine non-compliance.

Reliable, independent and expert advice is available to help you manage IR35 reform, however – and this case in particular highlights the importance of trusted support. 

Qdos offers award-winning commercial services to support over 2,800 businesses – from IR35 contract assessments to comprehensive insurance policies. 

With a track record of defending over 1,500 IR35 enquiries, and carrying out more than 2,000 IR35 status determinations each month, Qdos is well placed to advise end-clients regarding IR35 and make sure the appropriate processes are in place to ensure compliance.