HMRC take on their latest high profile case and ask Gary Lineker to pay an almost £5million unpaid tax bill.
HMRC are claiming the Gary Lineker owes:
- £3,621,735.90 income tax
- £1,313,755.38 National Insurance
This is on income he earned from BT Sport in 2015-16 and 2017-18 tax years and from the BBC between 2013-14 and 2016-17 tax years.
Currently, Mr Lineker is the BBC’s highest paid presenter, earning £1.75million in 2019-20 tax year. He’s recently signed a new five-year contract which sees him taking a 23% pay cut.
Wait, so he didn’t pay any tax at all?
Jon Holmes, Mr Lineker’s agent, told the Telegraph:“He has paid all personal tax. The amount [owed] is notional and disputed. Gary remains a self-employed contractor for several organisations.”
The issue with HMRC isn’t tax avoidance. They’re not arguing that he didn’t pay any tax at all. HMRC are arguing that his employment status as a freelancer is questionable. And that he should be classed as employed and therefore paying all the accompanying tax liabilities.
Gary Lineker was in a business, ‘personal service’ partnership with his then wife Danielle Bux, called Gary Lineker Media. Everyone Mr Lineker worked with was invoiced by Gary Lineker Media and he was paid through them. The business, Gary Lineker Media, paid their relevant taxes throughout this period.
Is this illegal?
No. Mr Lineker hasn’t done anything illegal. HMRC are disputing his position as a freelancer, in line with their crackdown on the use of IR35 – their regulations governing contracted and self employment tax.
This has two purposes:
- Make sure people aren’t avoiding the higher income taxes and NICs payments they’d pay as an employee and employer.
- Make sure people aren’t being exploited by being classed as freelancers or self employed, when they should be employees.
But the IR35 regulations themselves are complicated, making their application very difficult.
Director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), Andy Chamberlain, told Huffpost: “HMRC are on very uncertain ground here – they’ve lost several of these cases, including the recent Kaye Adams case at the Upper Tier Tribunal which could have a bearing on the outcome of this case.
“The problem here is not that Mr Lineker has done something wrong, or that HMRC are trying to enforce tax legislation – it is the rules themselves.
“They are so complex and so open to interpretation that no one understands them, even HMRC, which is why they so frequently lose at tribunal.”
What will happen to Mr Lineker?
Well, this is an ongoing case, interrupted by COVID-19 delays. It’ll be down to Mr Lineker’s legal team to prove that ‘self employed freelancer’ is the correct definition for his working situation. The fact that he works for multiple organisations is in his favour. There’s also the fact that Gary Lineker Media is set up as a business partnership, not a limited company, so the tax avoidance argument is weakened.
But it’s still a serious concern. HMRC have lost high profile cases like this in the past, like the one against Lorraine Kelly. And it’s unlikely that they would risk their time, money and reputation on a case they didn’t feel they could win.
A partner at lawyers Harbottle & Lewis, Yvonne Gallaghar, told the Guardian: “He will have to produce evidence that shows he is genuinely an independent contractor, that he is not controlled, he’s not supervised, he’s not effectively managed. Fundamentally the test is: if you did not have the service company in the way, would he look like an employee of the people he’s working for?”
His strong, and sometimes controversial, social media presence may become part of this evidence. Gallagher explains: “Lineker can argue that he is not subject to the same level of control as BBC employees given his apparent freedom to express personal and political views on social media,”
Whatever happens, Mr Lineker is under no criminal charges. And if he does owe HMRC extra tax, what he has already paid will be factored in and he will just have to pay the difference.
Meanwhile the IR35 regulations continue to confuse, rather than clarify, the tax position of the self employed. Always get advice from a tax professional or accountant if you’re in any kind of dispute with HMRC.