Mr Gary Lineker has made a name for himself in the world of tax and IR35 by defeating HMRC at the First Tier Tribunal.
Judge Brooks concluded that HMRC’s Income Tax and National Insurance determinations made on Gary Lineker and his then wife Ms Danielle Bux totalling nearly £5 million should be set aside. There had been a long running dispute between Mr Lineker and HMRC with the latter claiming that the intermediaries’ legislation (IR35) applied to the arrangement he had with the BBC and BT Sport for presenting duties. Gary Lineker and his then wife’s defence was that all relevant taxes had been paid by them via a partnership ‘Gary Lineker Media’ and there was never any attempt at tax avoidance or of them acting as ‘disguised employees’.
Many recent IR35 cases featuring high profile individuals in the sporting world, such as those of presenter Adrian Chiles and rugby union pundit Stuart Barnes centred around the provision of services via a limited company. Gary Lineker’s case was noticeably different in that his services were provided via a partnership. The legal arguments and evidence the judge had to consider was whether Mr Lineker and his wife had signed direct contracts with the BBC as individuals, albeit in partnership, rather than a separate legal entity like a limited company.
Although Judge Brooks confirmed that a partnership can be an ‘intermediary’, this was trumped by the direct contracts, and he pointed out that the intermediaries’ legislation was only applicable where services were provided not under a contract between the end client and the worker.
So HMRC has lost this latest IR35 duel and may decide to appeal to a higher court but their latest failure highlights a flawed, repetitive approach which is likely to fail again. Unfortunately, this will result in more innocent taxpayers being on the receiving end of a sustained period of worry and legal costs until a fresh look is taken at the principles and application of the IR35 rules.
IR35 legislation is complex, and getting it wrong can lead to severe financial and reputational consequences for both the contractor and the client. Therefore, it's important to take professional advice on IR35 to ensure you are correctly classified and following the rules and regulations.
