After a long and protracted legal battle, former footballer turned sports presenter Gary Lineker has finally won his appeal in the IR35 case brought against him by HM Revenue and Customs (HMRC). Lineker was accused by HMRC of underpaying £4.9m in tax and national insurance on his income from working as a presenter for the BBC and BT Sport in the 2013-14 and 2017-18 tax years.
The case came as part of the HMRC clampdown on tax avoidance under IR35 legislation which is designed to combat disguised employment when individuals work via a limited company rather than going on payroll or as self-employed.
Gary Lineker was told by HMRC that he should have been classed as an employee of the BBC and BT Sport for his presenting duties, rather than a freelancer. Lineker has insisted that he paid all taxes due on his income through a partnership (Gary Lineker Media), as defined in the 1890 Partnership Act, that was set up over a decade ago with his wife at the time, Danielle Bux.
Section 49 of the IR35 Intermediaries Legislation states that “the services are provided not under a contract directly between the client and the worker, but under arrangements involving a third party (“the intermediary”).
The case was heard by the first tier tax tribunal between 27th February and 1st March 2023. The tribunal released their verdict in a 17 page ruling (which can be viewed here) on 28th March with Judge John Brooks upholding the appeal made by Gary Lineker, meaning that HMRC were wrong to pursue him.
This follows similar high profile IR35 cases brought by HMRC against broadcasters including Eamonn Holmes, Kaye Adams, Lorraine Kelly and Adrian Chiles.
The tribunal judge acknowledged that Gary Lineker has paid all of his taxes due, saying “For each tax year, Mr Lineker accounted for income tax and Class 4 NIC on the entirety of the income from his services, less a fixed amount of £30,000, paid to his then wife, Ms Bux (and on which she paid tax)”
Ultimately Gary Lineker won his case as his situation is unique. His contracts are directly with the BBC and BT Sport as he operates via an unincorporated partnership, not via a limited company, so IR35 legislation does not apply.
James Rivett KC, who represented Gary Lineker, argued that “IR35 has nothing to do with it, they (HMRC) just looked in the wrong direction, and it proceeds from this assumption that a partnership is in some way an entity, and it isn’t, not this type of partnership.”
Rivett said the case the HMRC set out “cannot apply” in this instance. He went on to say: “HMRC are looking in the wrong place here; if they thought there was a quasi-employment relationship between Mr Lineker and the BBC and BT Sport, they should have assessed them”.
Gary Lineker’s case is the first IR35 case to come to the tribunal for the issue of whether there was a direct contract. In previous cases, the intermediary has been a limited company which is a separate legal entity from the client who may be the director and/or shareholder of the company, so the question of whether there was a direct contract has not arisen previously.
Gary Lineker released a statement via a spokesperson saying “I am pleased that the tribunal has confirmed that I have not failed to pay any taxes or national insurance by reason of the IR35 rules.” This is a great result for Lineker despite the expensive legal fees that he will no doubt have incurred.
They think it’s all over, but the case might yet go to extra time! HMRC now has 56 days from the date of the verdict to appeal the decision to the Upper Tribunal (Tax and Chancery Chamber) if they wish to do so. It’s uncertain at this stage whether they will appeal due to the unique nature of the case, but they have appealed the last four cases that they lost at the first tier tribunal stage.
A spokesperson for HMRC was quoted as saying “We do not agree with its decision that the (IR35) rules cannot apply in this case and we’re considering an appeal.”
At Gorilla Accounting, we can work with you to determine your IR35 status and ensure that all your tax payments are made in a way that maximises your earnings whilst still being IR35 compliant, so you have peace of mind that no HMRC investigations or penalties are coming your way.
If you’re looking to work with a new accountant and want to know more, you can contact us to request a call back here, or by calling us on 0330 107 9670 to speak to our expert team about your options.
