[UK] Gary Lineker wins £4.9 million tax battle with HMRC

In the UK, sports presenter and television personality Gary Lineker has won his appeal against HMRC over a £4.9m tax bill, BBC News reports.

The tax authority pursued the celebrity over taxes on income from both the BBC and BT Sport from 2013 to 2014 and from 2017 to 2018.

Mr Lineker is a presenter for BBC's Match of the Day and used to also work for BT Sport.

HMRC said he was an employee of both broadcasters, however, a judge has now reportedly ruled he was a freelancer and had contracts with both broadcasters.

In a statement, Tribunal Judge Brooks said, "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."

Mr Lineker made a statement on social media, "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."

IR35 was intended to clamp down on tax avoidance by so-called disguised employees, who charge for their services via limited companies.

Throughout the tribunal proceedings, Mr Linekar (62) reportedly insisted that all taxes were paid on the income via a partnership (GLM) set up in 2012 with his ex-wife Danielle Bux.

The case follows HMRC’s attempts to target other prominent broadcasters including Lorraine Kelly and Kaye Adams.

Earlier tribunal documents said Mr Lineker was disputing the bill and it had been agreed that he paid the income tax in full.

In February, Mr Lineker's lawyer James Rivett KC reportedly told a preliminary hearing in London that the star had been "dragged through the papers accused of not paying income tax which has been paid", and claimed there was a political element to the investigations.

Following the ruling, an HMRC spokesperson said, "The tribunal has confirmed the off-payroll rules apply to partnerships, as we have always said.

"However, we do not agree with its decision that the rules cannot apply in this case and we're considering an appeal.

"It is our duty to ensure everyone pays the right tax under the law, regardless of wealth or status."

Christy Wilson - tax associate at Katten UK LLP - has provided an overview and analysis of the decision.

Ms Wilson said, “This case is a decision on preliminary issues and turns on the interpretation of the IR 35 legislation, in contrast to most other IR 35 cases which are decided on their facts – so HMRC may well appeal the decision.

“Gary Lineker provided his services to the BBC/BT Sport through a partnership (‘Gary Lineker Media’) with his former wife, Danielle Bux.

“HMRC argued that the IR 35 legislation should apply to make Gary Lineker Media liable, as intermediary, to pay income tax and NIC under PAYE in respect of the fees paid by the BBC/ BT Sport to the partnership.

“The judge accepted that Gary Lineker Media was a genuine partnership, that a partnership could be an ‘intermediary’ for the purposes of the IR 35 legislation and that the contracts entered into between the BBC/BT Sport, Gary Lineker and Danielle Bux, under partnership law, bound Gary Lineker, Danielle Bux and the partnership. However the judge concluded that because Gary Lineker signed the contracts, albeit as a partner in the partnership, that meant that there was a direct contract between Gary Lineker and the BBC/BT Sport. 

“One of the conditions for the IR 35 legislation to apply is that ‘the services are provided not under a contract directly between the client [the BBC/BT Sport] and the worker [Gary Lineker] but under arrangements involving a third party (“the intermediary”)’. The judge decided therefore that the IR 35 legislation could not apply as there was a ‘contract directly with the worker’ even though that was also binding on the other partner and the partnership and so the services of Gary Lineker could equally be considered to be provided  ‘under arrangements involving a third party (“the intermediary”)’.

“The judge also said that had only Danielle Bux signed the contracts this would have meant that the partnership was entering into the agreements with the BBC/BT Sport but that there would be no direct contracts between Gary Lineker and the BBC/BT Sport and as such the intermediary legislation would apply.

“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 IR 35 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. 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.”

HMRC now has 56 days to appeal to the Upper Tribunal (Tax and Chancery Chamber).

Mr Lineker made headlines earlier this month when he was taken off air by the BBC over a tweet criticising government asylum policy.

He later returned to Match of the Day after the BBC's director general Tim Davie said an independent review of social media guidelines would be carried out.

Mr Davie reportedly denied accusations that the BBC had backed down.

Mr Lineker is a former England striker who also played for teams including Everton, Leicester, Tottenham and Barcelona He has hosted Match of the Day since 1999 and is the BBC's highest-paid star, having earned about £1.35m in 2020-21.

Source: BBC News

Ms Wilson’s analysis via GD Consulting

(Link and quotes via original reporting)

In the UK, sports presenter and television personality Gary Lineker has won his appeal against HMRC over a £4.9m tax bill, BBC News reports.

The tax authority pursued the celebrity over taxes on income from both the BBC and BT Sport from 2013 to 2014 and from 2017 to 2018.

Mr Lineker is a presenter for BBC's Match of the Day and used to also work for BT Sport.

HMRC said he was an employee of both broadcasters, however, a judge has now reportedly ruled he was a freelancer and had contracts with both broadcasters.

In a statement, Tribunal Judge Brooks said, "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."

Mr Lineker made a statement on social media, "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."

IR35 was intended to clamp down on tax avoidance by so-called disguised employees, who charge for their services via limited companies.

Throughout the tribunal proceedings, Mr Linekar (62) reportedly insisted that all taxes were paid on the income via a partnership (GLM) set up in 2012 with his ex-wife Danielle Bux.

The case follows HMRC’s attempts to target other prominent broadcasters including Lorraine Kelly and Kaye Adams.

Earlier tribunal documents said Mr Lineker was disputing the bill and it had been agreed that he paid the income tax in full.

In February, Mr Lineker's lawyer James Rivett KC reportedly told a preliminary hearing in London that the star had been "dragged through the papers accused of not paying income tax which has been paid", and claimed there was a political element to the investigations.

Following the ruling, an HMRC spokesperson said, "The tribunal has confirmed the off-payroll rules apply to partnerships, as we have always said.

"However, we do not agree with its decision that the rules cannot apply in this case and we're considering an appeal.

"It is our duty to ensure everyone pays the right tax under the law, regardless of wealth or status."

Christy Wilson - tax associate at Katten UK LLP - has provided an overview and analysis of the decision.

Ms Wilson said, “This case is a decision on preliminary issues and turns on the interpretation of the IR 35 legislation, in contrast to most other IR 35 cases which are decided on their facts – so HMRC may well appeal the decision.

“Gary Lineker provided his services to the BBC/BT Sport through a partnership (‘Gary Lineker Media’) with his former wife, Danielle Bux.

“HMRC argued that the IR 35 legislation should apply to make Gary Lineker Media liable, as intermediary, to pay income tax and NIC under PAYE in respect of the fees paid by the BBC/ BT Sport to the partnership.

“The judge accepted that Gary Lineker Media was a genuine partnership, that a partnership could be an ‘intermediary’ for the purposes of the IR 35 legislation and that the contracts entered into between the BBC/BT Sport, Gary Lineker and Danielle Bux, under partnership law, bound Gary Lineker, Danielle Bux and the partnership. However the judge concluded that because Gary Lineker signed the contracts, albeit as a partner in the partnership, that meant that there was a direct contract between Gary Lineker and the BBC/BT Sport. 

“One of the conditions for the IR 35 legislation to apply is that ‘the services are provided not under a contract directly between the client [the BBC/BT Sport] and the worker [Gary Lineker] but under arrangements involving a third party (“the intermediary”)’. The judge decided therefore that the IR 35 legislation could not apply as there was a ‘contract directly with the worker’ even though that was also binding on the other partner and the partnership and so the services of Gary Lineker could equally be considered to be provided  ‘under arrangements involving a third party (“the intermediary”)’.

“The judge also said that had only Danielle Bux signed the contracts this would have meant that the partnership was entering into the agreements with the BBC/BT Sport but that there would be no direct contracts between Gary Lineker and the BBC/BT Sport and as such the intermediary legislation would apply.

“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 IR 35 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. 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.”

HMRC now has 56 days to appeal to the Upper Tribunal (Tax and Chancery Chamber).

Mr Lineker made headlines earlier this month when he was taken off air by the BBC over a tweet criticising government asylum policy.

He later returned to Match of the Day after the BBC's director general Tim Davie said an independent review of social media guidelines would be carried out.

Mr Davie reportedly denied accusations that the BBC had backed down.

Mr Lineker is a former England striker who also played for teams including Everton, Leicester, Tottenham and Barcelona He has hosted Match of the Day since 1999 and is the BBC's highest-paid star, having earned about £1.35m in 2020-21.

Source: BBC News

Ms Wilson’s analysis via GD Consulting

(Link and quotes via original reporting)