IR35 developments – a wave of attention on Gary Lineker

We have covered several cases involving the intermediaries legislation (referred to as IR35) in the context of TV and radio presenters. The latest addition, styled as a “£4.9m tax battle with HMRC”, saw Gary Lineker successfully argue before the First-tier Tax Tribunal (FTT) that IR35 did not apply to his working arrangements with the BBC and BT Sport.

While the headlines place the spotlight on Mr Lineker, our employment tax experts provide their comments on the tax implications of the case.

Background

HMRC applied the IR35 rules to conclude that Mr Lineker, the well-known TV presenter and former footballer, worked for the BBC and BT Sport between the 2013/14 and 2017/18 tax years in an employed, as opposed to self-employed, capacity. This case did not involve an intermediary company, as often seen in IR35 cases, but instead involved Mr Lineker and his wife, Danielle Lineker, trading as a general partnership named Gary Lineker Media (GLM).

The BBC had entered into contracts with GLM for the provision of Mr Lineker’s media services in 2013 and 2015. Mr and Mrs Lineker had both signed the BBC contracts as partners of GLM. BT Sport entered into a similar contract in 2015, but this was signed solely by Mr Lineker for and on behalf of GLM.

The dispute focused on whether the IR35 rules were engaged, which requires the involvement of an “intermediary” and the lack of “direct contracts” between the client and the worker. The key issues in this appeal were whether:

• The IR35 provisions could apply to a partnership;
• GLM was a partnership;
• There were direct contracts between BBC, BT Sport and Mr Lineker.

Decision of the Tribunal 

The FTT was not convinced by Mr Lineker’s argument that the IR35 provisions could not apply to a general partnership on the basis that it does not have legal personality and cannot be an intermediary. The FTT referred to express provisions in the IR35 legislation which confirm that a partnership can be a “third party” and, as a result, an intermediary.

Mr Lineker also argued that the rights and obligations created by the partnership agreement were not sufficient to amount to a partnership in law. The idea here is that, if there is no partnership, the contracts would be directly with Mr Lineker in a personal capacity. A direct contract between client and worker, without an intermediary, will mean that the IR35 provisions cannot apply. The FTT disagreed and confirmed that the rights and obligations were sufficient to satisfy the statutory definition of a partnership.

Finally, the FTT was asked to consider whether, notwithstanding the partnership, there were direct contracts with Mr Lineker as a matter of law. The FTT decided that as Mr Lineker signed the contracts, even though it was for and on behalf of GLM, he had contracted directly with both clients. Interestingly, if only Mrs Lineker had signed the contracts for GLM, Mr Lineker would not have been treated as contracting directly and IR35 could have applied. The FTT noted that this appears unusual but was correct as a matter of law. Therefore, the IR35 rules could not apply on these facts and Mr Lineker’s appeal was allowed.

Moore Kingston Smith comments

Mr Lineker’s case is unique as this was the first time that a partnership was considered in the IR35 context and we did not see the usual well-rehearsed consideration of employment status which we have grown accustomed to.

In our view, it appears correct, that there was a direct contract with Mr Lineker by virtue of him engaging as principal of GLM. However, that the application of IR35 to general partnerships should depend on which specific partner executes the contract appears practically illogical. There is speculation that HMRC will be appealing but the perceived inconsistency in this case appears to be the correct technical analysis. It seems more likely that the IR35 provisions will be subject to some form of statutory amendment in the near future.

For the time being, the IR35 provisions remain a complex area to navigate as highlighted by the inconsistencies in recent case law. However, our employment tax experts are well placed to advise you on these complexities so please do not hesitate to contact us should you require any assistance.