IR35 Tax Appeals: Gary Lineker’s Off-Payroll Working Dispute with HMRC

What Is IR35, and How Does It Relate to Gary Lineker?

IR35, the UK’s off-payroll working legislation, is designed to prevent tax avoidance by individuals who provide services through intermediaries, such as Personal Service Companies (PSCs), but work in a manner similar to employees. This legislation ensures that such workers pay the appropriate income tax and National Insurance contributions.

Many contractors, particularly those in the media industry, find themselves caught in the cross-hairs of HMRC’s heavy-handed application of IR35 tax rules, facing hefty tax bills, assessments and penalties if they are deemed “disguised employees”.

Gary Lineker, a former England footballer and Match of the Day presenter, became one of the most high-profile figures entangled in an IR35 tax dispute. The case, centred on a £4.9 million tax bill, raised important questions about employment classification and the boundaries of freelancer autonomy.

What is IR35?

IR35 is tax legislation designed to ensure that contractors who conduct work in essentially the same way as employees, pay the correct amount of tax.

Who does IR35 apply to?

The IR35 rules in general apply to:

1. workers;
2. who provide a service;
3. to a company or individual;
4. through an intermediary;
5. where this service might ordinarily be done by an employee.

Gary Lineker’s IR35 Tax Dispute

The dispute involved income Lineker earned between 2013 and 2018 from the BBC and BT Sport. HMRC argued that Lineker should be treated as an employee of these broadcasters and taxed accordingly. However, Lineker maintained he was a freelancer, operating through GLM, a general partnership he set up in 2012.

Key issues in the case included:

• Intermediaries Legislation: HMRC claimed GLM acted as an intermediary, making Lineker’s income subject to IR35.
• Direct Contracts: Lineker argued his contracts with the BBC and BT Sport were direct and not facilitated through an intermediary.
• Section 49(1)(b) of the Income Tax (Earnings and Pensions) Act 2003: The tribunal examined whether his working arrangements met the legal definition of employment under this section.

The First-tier Tribunal ruled in Lineker’s favour in March 2023, determining that his partnership did not qualify as an intermediary under IR35. HMRC initially appealed the decision but withdrew its appeal before the Upper Tribunal hearing scheduled for December 2024 and settled the case.

Why Did HMRC Pursue Lineker Under IR35?

HMRC has taken an increasingly strict approach to enforcing IR35, targeting individuals who work through partnerships or PSCs but whose roles resemble employment. Lineker’s case was part of a broader campaign that has included other public figures, such as Adrian Chiles and Kaye Adams.

In Lineker’s situation, HMRC focused on:

• Control: Did the broadcasters dictate his schedule and duties, or did he maintain autonomy?
• Substitution: Could Lineker delegate his duties to another presenter?
• Mutuality of Obligation: Did the BBC or BT Sport guarantee him a continuous stream of work?

The tribunal found that Lineker exercised significant control over his work and bore the financial risks associated with freelancing, solidifying his status as a self-employed individual.

What Does Gary Lineker’s Case Mean for Contractors and Freelancers?

Lineker’s victory offers hope for other contractors facing similar IR35 challenges. It underscores the importance of clearly defined contracts and working arrangements that reflect genuine freelancer status. However, the complexity of IR35 means that no two cases are identical, and outcomes often hinge on nuanced interpretations of tax law.

For businesses, the case serves as a reminder to carefully assess the employment status of contractors to avoid costly disputes.

The Broader Impact of IR35

While the recent media cases grab headlines, IR35 impacts a much wider range of contractors across various industries:

• IT Contractors: Developers, programmers, and IT consultants frequently work through PSCs. Determining their IR35 status depends on factors like project control, equipment ownership, and the ability to subcontract.
• Marketing & Communications Consultants: These professionals often work on a project basis with various clients. IR35 hinges on factors like client control over deliverables, working hours, and the ability to subcontract work.
• Construction Contractors: Freelance plumbers, electricians, and other skilled tradespeople may operate through PSCs. IR35 assessment here looks at control over working methods, materials used, and whether they can bring in subcontractors.

This is not an exhaustive list, but it highlights how IR35 casts a wide net across the contractor landscape.

Yes. If you have a case with merits, you may have the right to challenge a tax appeal or tax assessment (but there is ordinarily a 30 day time limit). Seek legal advice as soon as possible.

HMRC are also bound by internal guidance, for example their Litigation and Settlement Strategy (LSS) to resolve tax disputes. HMRC will not usually persist with a tax dispute unless it potentially secures the best practicable return for the Exchequer and HMRC has a case which it believes would be successful in litigation.

Our team of tax specialist solicitors and barristers (our leading barrister was previously counsel to HMRC) offer effective and robust representation for you.

How Our Law Firm Can Help Contractors in IR35 Disputes

At LEXLAW, we recognise the intricate challenges contractors encounter in today’s dynamic tax environment. Our specialised team of legal experts is dedicated to IR35 compliance, providing bespoke solutions to protect your interests and mitigate tax disputes. Whether you are a seasoned independent professional or embarking on your freelance journey, we offer comprehensive legal support tailored to your specific needs.

The ongoing IR35 discourse, exemplified by high-profile cases such as Adrian Chiles, Gary Linker and Kaye Adam, underscores the complex landscape contractors navigate. As tax regulations continue to evolve, proactive legal counsel becomes indispensable in safeguarding the rights and financial well-being of self-employed individuals.

Our services include:

• IR35 Status Assessment: We evaluate your working arrangements to determine your IR35 risk.
• Contract Review: We help structure contracts to minimise exposure to IR35.
• Representation in HMRC Disputes: Our team negotiates with HMRC on your behalf and ensures your interests are protected.
• Tribunal Representation: In the event your case goes to the First-tier Tribunal (FTT), our experienced lawyers can effectively present your arguments.