TV personality, Gary Lineker, has had accusations by HM Revenue and Customs of being a disguised employee under IR35. This means he may be liable for £4.9m in tax.
IR35 legislation is imposed by the UK government to tackle tax avoidance from any “disguised employee” who provide services through limited companies. The legislation works by enforcing tax rates for people working through limited companies that are similar to that of regular employment.
The accusations have been sparked from past work that Lineker has provided for the BBC and BT sports between 2013 and 2017 and HM Custom and Revenue are now seeking contributions in both income tax and national insurance totalling £4.9m.
Gary Lineker media, the stars’ personal service company disputes these claims. They hold that the work taken isn’t that of a disguised employee. If Lineker and his company are correct, they would be exempt from the obligations of payment under IR35.
Tax tribunal documents show that this dispute between Lineker and HMRC has been ongoing for over a year.
Lineker media requested to amend its appeal at a tax tribunal earlier last year. However because of the current pandemic, the case remains outstanding.
Jon Holmes, Linekers agent, states in Linekers defence;
“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.”Jon Holmes, Linker’s agent.
The case comes after a slew of accusations against TV personalities in recent years. These names include Lorraine Kelly and Eammon Holmes; the latter of which lost his case at an employment tribunal but is currently working on an appeal.
There are some who speculate that the liability may not be entirely Lineker’s fault. CEO of IR35 specialist company, Qdos, Seb Maley states;
“The irony is that Gary Lineker may have been told by the BBC to work through a limited company. It might not have been his choice, as was the case with several other BBC freelancers who HMRC have targeted in recent years.”Seb Maley, Qdos CEO.
Maley’s scepticism towards HMRC results from past tribunals that he would claim “leaves a lot to be desired”. These referring to past mistakes by the government organisation.
Dave Chaplin, CEO of ContractorCalculator, has accused the pursuit as being “a misguided attempt to shore up the Treasury’s coffers”.
He would state; “The tax efficiency by hiring someone self-employed is actually obtained by the firm that hires them, in this case the BBC, who would have avoided having to pay employer’s national insurance of 13.8% on top of whatever monies were paid to Mr Lineker. To suggest that he has avoided tax is pointing the finger in entirely the wrong direction”.
Additionally, Chaplin would also point to the changes in IR35 tax legislation in 2017 that state that where someone is a “deemed employee”, the firm should pay the contractor’s national insurance (in this case, the BBC). He said “If Gary Lineker’s situation was under the IR35 microscope under the new rules then the BBC would have a tax bill to pay.”
(Read more about IR35 tax legislation changes for this current year, here).
A factor that makes this case so high profile, is Lineker’s position as BBC’s highest paid star. Linker has recently been earning £1.75m between 2019 and 2020.
Seb Maley, CEO at IR35 specialist company Qdos, summarises the importance of this case saying “This is the most high-profile case in the history of the IR35 legislation. It might also carry the most tax liability – a staggering £4.9m”.
For more information regarding IR35 or for HR advice, contact us.
- Pay Dispute: How to Effectively Handle Salary Conflicts in Your Business
- How To Combat Age Discrimination In The Workplace
- Is a 4-Day Work Week the Solution to a Work-Life Balance?
- Monkeypox – Advice for Employers
- Can Employees work abroad for the same company?