It has emerged that Match of the Day host, Gary Lineker, is at the centre of an IR35 case that carries with it a staggering £4.9m in tax liability - a sum which the well-known pundit is appealing.
The case is the latest in a series of tax investigations into high profile presenters and celebrities, with HMRC taking the view that Lineker was operating as a disguised employee on contracts held at the BBC and BT Sport in recent years.
According to documents released in advance of a First Tier Tax Tribunal hearing, HMRC claim he owes £3,621,735.60 in Income Tax and £1,307,160.46 in National Insurance contributions for his work presenting Match of the Day and Champions League football on BT Sport.
Lineker’s company, Gary Lineker Media, which is a partnership established with his ex-wife, Danielle Bux, amended its grounds of appeal in March 2020, but the case is ongoing due to delays resulting from the Coronavirus pandemic.
Speaking to The Financial Times, the star’s agent, Jon Holmes, said: “It is a question of whether he is employed by the BBC or not.”
“Most people, once they understand employment law, would say of course he isn’t. He works for many other people.”
The structure of Lineker’s company, which is a limited liability partnership (not a personal service company), means a significant amount of the £4.9m has been paid, with The Telegraph suggesting HMRC is hoping to receive less than £1m.
When focusing on the contract Lineker held with the BBC specifically, there may be more to it than meets the eye.
The broadcaster has been criticised in recent years for apparently insisting that individuals operate as freelancers as a mechanism for avoiding employers’ National Insurance contributions, which is a tax of 13.8% paid by employers for every employee hired. This was a point made by a judge during a case in which presenters, Joanna Gosling, David Eades and Tim Willcox were found to have been incorrectly operating outside IR35.
It’s therefore not beyond the realms of possibility that Lineker was encouraged to operate as a freelancer by the BBC at least.
While the tax payment before interest and possible penalties that Lineker would be expected to pay is not £4.9m, the sums involved are still likely to be vast.
The figures serve as yet another reminder of the importance of IR35 compliance. Granted, few - if any - contractors will charge rates similar to Lineker, but the cost of non-compliance can easily run into tens of thousands, if not more.
This is something that businesses, along with contractors, need to be acutely aware of. Following IR35 reform in the private sector on 6th April 2021, which saw medium and large companies become responsible for administering IR35 and fee-payers liable, HMRC will investigate engagers.
Along with the contrast in tax liability, it remains to be seen how similar Lineker’s engagements were to most contractor’s, if at all. In other words, this shouldn’t worry contractors or frighten businesses into placing them inside IR35 irrespective of their true status.
The contractual terms held and actual working practices in both arrangements are yet to be revealed. However, if they bear any resemblance to the likes of Kaye Adams, Lorraine Kelly, Eamonn Holmes to name but a handful of presenters investigated by HMRC, they are likely to be markedly different to typical contractors.
From having the right to provide a substitute to the absence of Mutuality of Obligation (MoO), most genuine contractors are able to demonstrate their outside IR35 status with relative ease. It’s not always as straightforward for presenters, particularly those whose name and reputation is linked so closely to the programme.
That being said, Lorraine Kelly, who presented ‘Lorraine’ on ITV, successfully appealed a HMRC verdict at a tax tribunal in 2019, in a case carrying £1.2m in tax liability. This could prove important for Lineker, whose name and reputation - while associated with Match of the Day and BT Sport - is arguably of lesser importance to either shows.
In the coming months, more information regarding Lineker’s contracts will emerge. And while we can only speculate right now, it would come as no surprise if it’s decided that the former England striker is a genuine freelancer, meaning that HMRC have simply got things wrong again.
Having carried out over 150,000 IR35 status reviews since the legislation was introduced and saved contractors over £35m in potential tax liabilities, Qdos are a leading provider of award-winning services, including IR35 insurance. For more information, please call 0116 262 0999 or email [email protected].
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