Gary Lineker has successfully won his battle with HMRC over a £4.9 million tax bill. But what, if anything, does the ruling mean for contractors when, in the end, the usual IR35 employment status tests were never even considered?
What happened in the Lineker vs HMRC case?
HMRC claimed that income received by Gary Lineker Media (GLM) for Lineker’s work with the BBC and BT Sport should be caught by the IR35 legislation.
The dispute covered the 2013/14 to 2017/18 tax years, with HMRC seeking around £3.6m in income tax and £1.3m in National Insurance contributions.
GLM was a general partnership between Lineker and his former wife, Danielle Bux. The partnership agreement was signed on 17 October 2012.
The case was the first time the First-tier Tribunal had considered how the IR35 legislation applies where services are supplied through a general partnership.
In Lineker and Bux t/a Gary Lineker Media v HMRC [2023] UKFTT 340 (TC), Judge John Brooks found that IR35 can apply where services are supplied through a partnership.
But it didn’t apply here.
Lineker had signed the relevant BBC and BT Sport contracts himself. Under partnership law, he therefore contracted as a principal as well as binding the partnership.
As a result, there were direct contracts between Lineker and the BBC and BT Sport. Judge Brooks concluded that:
the intermediaries legislation (IR35) does not, and cannot as a matter of law, apply.
That meant the usual employment status questions around control, mutuality of obligation and the hypothetical contract never had to be decided.
It’s an unusual result. GLM was a genuine partnership and a partnership can potentially be an IR35 intermediary, but Lineker’s own signatures meant the statutory gateway in section 49(1)(b) ITEPA 2003 wasn’t satisfied.
Judge Brooks also made clear that the result could have been different if Danielle Bux alone had signed the contracts on behalf of GLM. In those circumstances, Lineker’s services could have been supplied through a third party and IR35 could potentially have applied.
You can read the full First-tier Tribunal decision here.
Read our full Gary Lineker Media case summary here.
What does the case mean for IR35 and contractors?
Probably less than the size of the tax bill might suggest.
The Tribunal did not decide whether Lineker would have been an employee of the BBC or BT Sport. His appeal succeeded before the employment status tests were reached.
We asked Seb Maley, CEO of tax specialists Qdos, some questions about the case.
Did this case provide anything useful for IR35 watchers?
“Other than showing HMRC’s appetite for IR35 investigations, there’s not a massive amount to take from the Lineker case for typical contractors. Although, it’s an important reminder to contractors that they too can be investigated by HMRC for contracts completed prior to the introduction of the off-payroll rules.”
Was it the first case which dealt with direct contracts and partnerships?
“It’s certainly the first I’m aware of which has gone to tribunal, yes.”
Can a general partnership be an ‘intermediary’ for IR35 purposes, even though it’s not a separate legal entity from its members?
“While it’s uncommon, partnerships can be an intermediary for IR35 purposes. For example, if the worker owns 60% or more of the profits, the majority of the partnership’s profits come from a single client or the income of a partner is based on the income generated by another partner.”
The Tribunal itself confirmed the important point: a general partnership can fall within the intermediaries legislation. Lineker won because of the way the particular BBC and BT Sport contracts had been executed, not because partnerships sit outside IR35.
Can Lineker reclaim his significant costs for this case?
“This six-year-long case is likely to have cost Gary Lineker a fortune. The injustice is that he’s innocent and HMRC got it wrong. Worse yet, it’s only in very rare cases that costs can be reclaimed in First Tier Tribunals. Above all else, a case of this significance – and carrying such vast tax liability – highlights the importance of holding IR35 insurance.”