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HMRC latest IR35 case against Gary Lineker could spark changes to General Partnership laws

BBC Presenter Gary Lineker poses for CBBC Celebrity Supply Teacher Spanish Lesson Photo Source: BBC Programmes
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The HMRC case against Gary Lineker has reignited, according to an Upper Tribunal (Tax and Chancery) hearings and register announcement. Dave Chaplin, CEO of IR35 compliance firm IR35 Shield offers his insights into why HMRC is bringing Lineker back to court

“HMRC probably felt compelled to appeal, because if they didn’t, it would have signalled a potential loophole in the legislation where General Partnerships are used,” says Chaplin.

“HMRC’s Counsel, in court, admitted that there were other IR35 cases HMRC had settled where partnerships were used. If that was the case, and HMRC let the Lineker ruling go, then HMRC may have faced difficulties for other cases,” he says.

Chaplin says HMRC appears to be “going all-in on this, to buy themselves time, and prevent contagion in other cases.”

However, Chaplin suggests that if HMRC lose, one would expect them to try and appeal to the Court of Appeal, and then the Supreme Court.

“If HMRC suspect they will eventually run out of road, they will probably lobby Ministers for a change in the law, to shutdown issues going forward.”

The Freelance Informer previously reported that the former professional footballer and sports commentator won his multi-year battle against HMRC, having been wrongly accused by HMRC of underpaying £4.9m in tax. But the judgment has left many freelancers confused as to why HMRC went after the TV presenter in the first place leaving taxpayers to pay for yet another high-profile HMRC legal battle.

Here’s the original report:

“Lineker is well known for standing up to bullies, and once again, he has won. Good for him,” said Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield.

“Let’s hope that HMRC considers this IR35 match over and doesn’t demand a replay,” said Chaplin.

Gary Lineker’s case was heard by the first-tier tax tribunal between the 18th and 19th of January this year by Judge John Brooks, who released the decision on 28th March 2023 which upheld the appeal made by Gary Lineker on behalf of Gary Lineker Media.

Lineker had been appealing a £4.9m IR35 bill, with HMRC of the view that contracts held between the presenter’s partnership (owned with his ex-wife Danielle Bux) and the BBC and BT Sport were that of disguised employment. 

However, because the contracts were deemed to be held directly between Lineker and the BBC and BT Sport (as opposed to between Lineker’s partnership – Gary Lineker Media – and the broadcasters), the judge determined that the arrangements fall outside of the intended scope of the IR35 legislation. 

The decision hinged on Lineker signing the contract himself, as both the worker and a principal of his partnership. If his partner, Danielle Bux, had signed, IR35 could have come into the equation.

“Just when we thought IR35 couldn’t get any more complex, this ambiguous, fundamentally flawed legislation surprises everyone,” said Seb Maley, CEO of Qdos, an insurer for the self-employed.

The judge acknowledged that Lineker had paid his taxes, 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).”

If Lineker signed a ‘direct’ contract’ with BBC and not through his limited company then how did he invoice for his work? How was he taxed?

Paragraph 49 of the judgement explains:

“Mr Lineker filed a self-assessment tax return in respect of each of the relevant tax years, 2013-14 to 2017-18, completing the partnership pages to account for the income received through GLM. Recorded in the “Your share of the partnership’s trading or professional profits” section of the returns was the income received in respect of the provision of his services to the BBC, BT Sport and other entities. 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).”

Maley said of the latest IR35 appeal that things will remain unclear for contractors and freelancers. 

“It’s a confusing one,” Maley told The Freelance Informer. “Lineker signed a contract as a worker and the principal of his partnership which, in the eyes of the law, meant he held a direct working relationship with his clients.

“This is where traditional partnerships will differ from limited companies, in that there is no incorporated body. His partnership was paid for the work completed. He paid income tax on his share of the profits via a self-assessment tax return.”

Why would having his partner sign the contract made any difference for tax purposes?

Maley explained: “If Danielle Bux signed the contract it would have meant that the partnership – Gary Lineker Media – held the contract, as opposed to Lineker himself. This would have opened the door to a legitimate IR35 investigation.”

Dave Chaplin of IR35 Shield: HMRC has wasted taxpayers’ money fighting a losing battle

Why did HMRC come after Lineker then?

Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield, who watched the tribunal case provided his insights into the latest HMRC case against a freelancer:

“Gary Lineker’s IR35 case was unique because he operated via a General Partnership, rather than via a Limited Company. The difference meant he had already paid more income tax than HMRC was asking him to pay under the Intermediaries Legislation.

No one seems to understand why HMRC issued a tax demand for tax that was already paid.

Dave Chaplin, CEO of IR35 Shield

Why is HMRC wasting taxpayer money on high-profile cases?

“Gary Lineker has had to waste a lot of money on defending himself, money which no doubt he would have preferred to spend on more charitable causes.  Moreover, HMRC has wasted taxpayers’ money fighting a losing battle,” said Chaplin.

“HMRC now needs to take a long hard look in the mirror and try and understand how such a bungled investigation occurred. To suggest Lineker was an employee of the BBC is absurd.

This is just another example of a high-profile individual being caught up in a sausage machine-like IR35 racket that HMRC has been running for years, to try and extort money from genuine freelancers with the threat of expensive court cases, which most can ill afford.

Dave Chaplin

“This will be a massive relief for Gary Lineker, but how it even got to this point is beyond me,” said Maley.

“HMRC created and enforces the IR35 rules but couldn’t tell from the outset if IR35 should have even been a consideration,” he continued.

“The case illustrates everything wrong with HMRC’s approach to IR35 compliance. Other than having a habit of failing to understand the very rules it designed, HMRC pursues innocent individuals for years. This takes a huge toll, not just financially but emotionally too. 

“I also dread to think how much time, money and resource HMRC has wasted on this case. What’s more, you can’t rule out HMRC appealing this decision,” said Maley.

Those readers interested in understanding the differences between a Limited Liability Partnership (LLP) and a Limited Company, may want to check out this article.

2 Comments
  1. Martyn Valentine says

    I’m amazed that Lineker’s legal team didn’t apply for summary judgment or a strike out under the 2008 tribunal rules. I hope that a lawyer advises Lineker to apply for costs.

    The facts are clear cut – no intermediary, no IR35 liability, but an application to strike out is a legal process usually kept under wraps for commercial reasons, especially when tenancy fees must be paid to chambers.

  2. Rakesh says

    How much WAS Gary actually willing to pay? Seems like in that respect, the facts are clear cut only from the perspective that Gary was definitely trying to avoid tax to the tune of £4.9M. HMRC are not wasting tax-payer money, since the cost of staff managing the case is ‘built in’. The billable fee for court and Judge are ditto already built in to the general system of justice. All these people and staff are paid and costed whether they are on Gary’s case or a.n. other. The maths used is simple and not time consuming. What HMRC are trying to do is pay the bills of failed Covid plans and failed immigration policy. Under any other sequence of events over the past few years, HMRC would have moved onto easier targets. I would predict that Gary needs to settle to prevent grey hair and poor sleep lines. Possibly not the 4.9 but how about 1.9? You only live once. Be happy to pay tax for the country that provides safety and opportunities for fantastic careers beyond a very short football profession. Quite happy to take money from the BBC, not happy to pay HMRC…. both Government agencies. Mirror time my friend.

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