Gary Lineker has won a First Tier Tribunal (FTT) appeal against HMRC after being accused of underpaying £4.9m in tax between 2013 and 2018
The sports presenter and former footballer, who worked for the BBC and BT Sport, was informed by HMRC that he should have been classed as an employee for his presenting work, rather than as a freelancer.
The litigation involved the IR35 intermediaries legislation which is designed to clamp down on contractors who charge for their services through personal service companies.
HMRC pursued Lineker for £4.9m it claimed should have been paid on income received between 2013 and 2018.
However, Lineker provided his services via a partnership and this type of arrangement was not covered by the IR35 rules.
In February 2013, Lineker and his ex-wife, Danielle Bux, signed an agreement with BBC for the provision of his presenting services between 1 July 2013 to 30 June 2016.
Later in June 2015, Lineker also entered into an agreement with BT Sport, trading as Gary Lineker Media (GLM), and a further contract with the BBC, running between 2015 and 2018 (BT Sport Contract) and 2015 to 2020 (the Partnership).
Lineker filed a self assessment tax return for each of the relevant tax years, 2013-14 to 2017-18, completing the partnership pages to account for the income received through GLM.
For each tax year, Lineker accounted for income tax and national insurance contributions (NICs) on the entirety of the income from his services, less a fixed amount of £30,000, paid to Bux.
On 21 April 2017, HMRC wrote to GLM requesting a breakdown of the income of the partnership for the relevant tax years.
HMRC confirmed that this was not an enquiry into the partnership’s tax return and asked whether GLM had considered the possibility of ‘the partnership being subject to what is commonly referred to as the IR35 legislation’.
On 16 February 2018, HMRC issued Lineker and Bux with Regulation 80 determinations for income received in 2014-15 and 2016-17.
It also issued s8 Social Security Contributions Act 1999 (SSCA) notices in respect of income received between 2013-14 to 2017-18.
In total, HMRC pursued Lineker for £3,621,735.90 in income tax and £1,313,755.38 in NICs received between 2013 and 2018.
Throughout the proceedings, Lineker argued that all taxes were paid on the income via the GLM partnership.
The FTT found the IR35 legislation did not apply to GLM because there were direct contracts between Lineker and both the BBC and BT Sport.
Judge John Brooks 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 application ‘where services are provided not under a contract directly between the client and the worker’. In this case, Mr Lineker’s services were provided under direct contracts with the BBC and BT Sport.
‘Although such a conclusion might appear inconsistent with my conclusions that the intermediaries legislation can apply to partnerships and that GLM was a partnership as defined by s1(1) of the Partnership Act 1980, that is not the case.’
Dave Chaplin, CEO of IR35 Shield, said: ‘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.
‘I always said, if Gary Lineker was a tax avoider, then he was a terrible one because he chose to structure his tax affairs that maximised the tax he paid, not minimised it.’
The FTT allowed the appeal. HMRC has 56 days to appeal to the Upper Tribunal.
