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Gary Lineker wins IR35 tax case against HMRC

Gary Lineker has won his multi-year battle against HMRC, having been wrongly accused by HMRC of underpaying £4.9m in tax. The first-tier tax tribunal hearing for Gary Lineker's case was heard by Judge John Brooks on 27 Feb to 1st March 2023, who released his decision on 28th March 2023 – the appeal was upheld, meaning HMRC were wrong to pursue him.

Notably, the judge acknowledged that Lineker had paid all 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)."

In a statement released to ContractorCalculator, 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, who watched the tribunal case, says: "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."

Why did Gary Lineker win his case?

Lineker won his case, not by arguing about complex matters of status law, but because his situation was unique, in that he operated via a partnership and had a direct contract with both the BBC and BT Sport.

In section 49 of the Intermediaries Legislation "Engagements to which this Chapter applies, "the rules state under section 49(1)(b) that the rules apply where "the services are provided not under a contract directly between the client and the worker but under arrangements involving a third party ("the intermediary")."

Lineker's case was the first time that the issue of whether there was a direct contract had come before the Tribunal. In all previous cases in which the intermediaries legislation has been considered, the intermediary has been a limited company and, as a result of such a company having a separate legal personality from the client who might be a director or shareholder of the company, the question of whether there was a direct contract between the client and worker has not arisen.

After examining the contractual documentation, the Tribunal decided that "It must therefore follow that, 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" (emphasis added)."

Will HMRC appeal the Gary Lineker case?

HMRC have sought to appeal the last four cases they have lost at the First-tier tribunal, so it would not be surprising if they seek to do so again.

Chaplin says: "I hate to think how much money Gary Lineker has had to waste on defending himself, money which no doubt he would have preferred to spend on more charitable causes."

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

"This is just another example of a high profile individual being caught up in the narrowed down 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 they cannot afford.

"Lineker is well known for standing up to bullies, and once again, he has won. Good for him.

Published: 28 March 2023

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