Some background – HMRC first began pursuing Mr Lineker in 2017 over an estimated £4.9m tax liability after investigating three contracts he held with the BBC and BT Sport between 2013 and 2018, and whether these were subject to the IR35 legislation. Mr Lineker undertook said contracts through his general partnership, Gary Lineker Media.
The tribunal took place between 27th February and 1st March this year. It was overseen by Judge John Brooks, who ruled that, in Lineker’s circumstances, “the intermediaries legislation does not, and cannot as a matter of law, apply”.
It comes as no surprise that HMRC are pressing forward with appealing the First Tier Tribunal’s decision on this unique, high-profile case showing once more that they are still struggling to understand their own rules, in this case whether they even apply to begin with.
The legal intricacies of general partnerships are complex, not least in how they interact with IR35. We know currently that IR35 does apply to partnerships, the FTT found that GLM was indeed a partnership, however Mr Lineker won on the basis he signed his contracts in a personal capacity thereby contracting directly with the BBC / BT Sport. And so…it was found that IR35 cannot apply. Confused? If so, join HMRC’s club!
This is the latest turn in what will no doubt be a very long road from here on out, with a lot of possible outcomes. HMRC’s argument will likely focus on how Mr Lineker intended to enter the contract. If HMRC win, Mr Lineker will be dealing with a full-blown IR35 case. If they don’t, they have other options – the most likely being pursuing the BBC and/or BT Sport in an employment status case, or continuing right up to the highest courts.
Whilst this case is not yet really of interest to the typical PSC contractor, people trading in partnerships should keep a close eye on it as HMRC are clearly keen on setting boundaries in the way such entities enter into their arrangements. But be prepared for a long wait for any certainty – the hearing date is yet to be set and the case has already been hanging over Mr Lineker for 6 years.
What contractors can take from this is that this again demonstrates HMRC’s challenges in grappling with their own legislation, showcasing the potential for lengthy battles when investigations are initiated. It is fortunate that Mr Lineker has the resources to sustain a strong defence, but not all contractors will be as fortunate. It underscores the importance of being well-prepared with a solid defence from the outset.