Regular readers will not be surprised that HMRC has lost another high-profile IR35 case, but this one is very unusual. HMRC claimed that former England footballer turned pundit, Gary Lineker owed £4.9 million on income received between 2013 and 2018, on the basis that he was inside IR35 for his contracts with the BBC and BT Sport.
Throughout proceedings, Lineker insisted all taxes were paid on the income via a partnership set up in 2012 with his ex-wife Danielle Bux.
IR35 cannot apply “as a matter of law”
Mr. Lineker contracted with the BBC and BT Sport through a general partnership that he held with Ms Bux. This partnership was not a separate legal entity, like a Limited company would be.
The judge said: “As a matter of law, when Mr Lineker signed the 2013 BBC Contract, the 2015 BBC Contract and the BT Sport Contract for the provision of his services, he did so as principal thereby contracting directly with the BBC and BT Sport.
“As such, the intermediaries legislation cannot apply – it is only applicable ‘where services are provided not under a contract directly between client and the worker’.
Mr Lineker has commented via a spokesman “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.”
Following the ruling an HMRC spokesperson said: “The tribunal has confirmed the off-payroll rules apply to partnerships, as we have always said.
“However, 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.”
The important points …
IR35 has not been tested yet – this case only concerned whether IR35 could apply. Accordingly, the court has not yet examined whether the relationships between Mr. Lineker and his clients resembled employment. Even if HMRC were to win an appeal against this ruling, the matter will not be decided.
The figure given of £4.9 million is not accurate, as National Insurance is the only thing at stake. Tax has been paid already, as have class 2 and class 4 NICs (based on profits).
It’s important to remember that this case is extremely unusual. It’s the first time the FTT has heard an IR35 case that didn’t involve a Limited company, and Mr. Lineker’s situation is very different from that of most contractors.
What it means for contractors
Most contractors who need to consider IR35 will be trading through a Limited company and will not find themselves in this position. If contractors are searching for useful lessons, there are two main ones here:
It’s important to protect yourself. Ensure you get professional advice about your IR35 status and gather evidence in support of your status as a matter of routine.
If HMRC contact you about your status, don’t assume their opinion is correct. Contact your chosen IR35 status professional immediately, and act on their advice.
If you have questions or if we can help in any way, please call our expert team on 012096 468483 or email firstname.lastname@example.org.