It seems like Gary Lineker can't help but find his name in the headlines right now. On this occasion, we won't be looking at on his opinions on government immigration policy. Instead, we'll be looking at the much more interesting issue of his tax affairs!

Kick-off

When Gary Lineker contracted with the BBC and BT Sport back in 2013 and 2015, rather than entering into a simple contract between himself and the broadcasters, he formed a partnership with his then wife Danielle Bux and the partnership contracted with the broadcasters instead. In respect of the apparent contractual and legal arrangements put in place, all relevant taxes were paid.  

Half-time

Unfortunately, a dispute arose in 2019 about whether the partnership arrangement was legitimate for tax purposes or whether it was at risk of being challenged under the IR35 regime.

As you will probably be aware, under IR35 legislation, HMRC has the power to unearth and subject to full employment taxes so-called ‘disguised’ employment relationships. These often arise where a person is providing their services to an ‘employer’ in much the same way as an employee, but has inserted an ‘intermediary’ (normally a limited company) between the alleged ‘employer’ and ‘employee’ as a way of disguising the true nature of the working relationship. Although the intermediary is most commonly a limited company, the IR35 regime expressly states that the intermediary can also be a partnership.

Effectively, HMRC argued that the partnership Mr Lineker and Ms Bux had formed was an ‘intermediary’ used to disguise what was correctly to be categorised as a direct employment relationship between Mr Lineker and the BBC and BT Sport respectively. If true, he had failed to pay the correct employment taxes.

The final whistle?

This case went before the First Tier Tax Tribunal earlier this year and the judgment was issued on 27 March 2023. Judge John Brooks reached some interesting conclusions. Firstly, he concluded that the partnership created by Mr Lineker and Ms Bux was an entirely valid and properly constituted one. Secondly, he was satisfied that a partnership could be an intermediary, so as to trigger the application of IR35 in a situation such as this. However, the third and crucial finding Mr Brooks made was that because Mr Lineker had personally signed the contracts between his partnership and BT Sport and the BBC, he had in fact entered into direct contractual relationships with them. As a result, there was no effective intermediary inserted between Mr Lineker and the broadcasters. Therefore, if there was no intermediary, the IR35 regime could not apply.

Extra time and then penalties?

This seems like a peculiar decision. The case appears to have turned on which of the partners in a partnership physically signed the contracts by which the partnership was bound. Had only Ms Bux signed the contracts on behalf of the partnership, the contractual obligations on Mr Lineker and Ms Bux would have been same, yet it would appear that the tax implications could have been materially different. Can this be right?

Interestingly, HMRC are said to be considering an appeal.  So this may not be the last we have heard of this particular match up.