In news that will be welcomed by the contracting community, Gary Lineker has won his high-profile tax case against the HMRC.
The IR35 case, which has rumbled on for several years, carried a tax liability of £4.9 million.
The case was brought in relation to income earned by Lineker and his ex-wife Danielle Bux, through their contract with the BBC between June 2013 and June 2016 and a contract with BT Sport between June 2015 and May 2018. The judge ruled that Lineker fell under IR35, but because there were direct contracts between the parties (the partnership), the rules did not apply, and Lineker was self-employed for tax purposes.
Judge John Brooks stated that Mr. Lineker had correctly paid all the due income tax and National Insurance Contributions.
The structure of Lineker’s company, a limited liability partnership, is distinct from a personal service company, had already paid a substantial portion of the £4.9 million tax liability, leaving the HRMC hoping to claim less than £1 million.
This was the first case brought before the Tribunal of this kind.
Previously, the intermediaries legislation had been considered, as the intermediary was a limited company, which was a specific legal entity, which means that the question of whether or not there was a direct contract in place had not been raised.
When the Tribunal had reviewed the contractual documentation, they concluded "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 are not under a contract directly between the client and the worker."
Whilst Lineker has won his case, it is unlikely that the HMRC will let this go without a fight, and they are considering an appeal.
If you have any queries in relation to IR35 and Compliance, contact us at Gerrard White and we will be more than happy to help you. 01892 553355 | email@example.com
Reference: BBC News