Gary Lineker wins tax battle against HMRC

The sports presenter was pursued by HMRC over taxes on his income from the BBC and BT Sport. The tax authority said Lineker was an employee for both broadcasters, as part of the IR35 legislation, which was designed to prevent tax avoidance.

A judge has ruled that he was a freelancer and had contracts at both broadcasters.

The litigation was in regard to a contract Lineker and his ex-wife signed with the BBC, which HMRC said tax should have been paid on income earned between 2013 and 2016, and a contract with BT Sport between 2015 and 2018.

Section 5 of the Partnership Act provides that, “Every partner is an agent of the firm...unless the partner so acting has in fact no authority to act for the firm in the particular matter.”

Lineker wrote on Twitter: "I had already paid all tax due at the top rate and happily so. I’m totally flabbergasted as to why I was expected to pay double. Thankfully justice was done."

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The Tribunal Judge Brooks acknowledged that Lineker had paid his taxes, saying in a statement: "The intermediaries legislation (IR35) can apply to arrangements where an individual’s services are supplied to a client through a partnership.

"The effect of my conclusions is that because there were direct contracts, between the BBC and Mr Lineker and BT Sport and Mr Lineker, the intermediaries legislation (IR35) does not, and cannot as a matter of law, apply."

"Accordingly, and notwithstanding GLM (Gary Lineker Media) being a partnership, that is the end of the matter and the appeal succeeds."

HMRC is reportedly considering appealing this decision as they “do not agree” with the tribunal over the off-payroll rules applied in this case.

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A spokesperson for Gary Lineker said: "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."
 
Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield, said:: “Gary Lineker’s IR35 case was unique because he operated via a Limited Liability Partnership (LLP), 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.

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"HMRC has wasted taxpayers’ money fighting a losing battle.
 
"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."

However Christy Wilson, tax associate at Katten UK LLP said: "This seems an arbitrary result. It is an odd outcome to say that the IR 35 legislation would apply if one partner had signed the agreements, but the IR35 legislation would not apply if another partner had signed the agreements – even though under partnership law, the other non-signing partner is equally bound by the agreements.

"Arguably, it would make more sense for the court to construe the IR 35 legislation purposively and to say that it does not apply to situations where there is a contract between the worker and client only and no other arrangements involving a third party.

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"Otherwise the application of the IR 35 legislation to partnerships is dependent on which partners sign the agreement - surely not a satisfactory state of affairs.

"It is likely that HMRC may seek to appeal this decision on a point of law. Additionally HMRC may have missed an opportunity here in that they perhaps should have also raised assessments against the BBC and BT Sport on the basis that if the IR 35 legislation did not apply, the relationship between the BBC/BT Sport and Gary Lineker was an employment relationship."

Gary Lineker is the latest in a line of high profile presenters, including Eamonn Holmes and Lorraine Kelly, caught up in IR35 cases.