Gary Lineker is currently fighting an IR35 tax case in the courts against HMRC who claim he owes £4.9million in unpaid tax. Upon hearing the news, some may assume it is a complicated legal matter concerning only the wealthy and famous but analysis of the details shows freelancers and contractors across the UK could be hit by the same issues.
In a nutshell, HMRC is pursuing Mr Lineker through a First Tier Tax Tribunal.
HMRC have taken the view that Mr Lineker should have been operating “inside IR35” on contracts held at the BBC (2013 – 2017) and at BT Sport (2015 – 2018).
Mr Lineker is appealing and Dave Chaplin, the CEO of ContractorCalculator, commented on the developments and pledged his support to Mr Lineker’s cause.
He explained: “Once again, we are seeing a high-profile celebrity being targeted by HMRC in a misguided attempt to shore up the Treasury’s coffers.
“HMRC changed the rules for IR35 in the public sector from April 2017, and now if an individual is found to be a ‘deemed employee’ the employer’s National Insurance is paid by the firm hiring the contractor.
“If Gary Lineker’s situation was under the IR35 microscope under the new rules then the BBC would have a tax bill to pay.
“Whilst the tax figures in these rulings can be considered headline grabbing, one has to consider that those figures are largely inflated compared to what is actually owed, because the amounts of tax already paid need to be offset, which in average cases is at least a third of the original sum.
“I sincerely hope that Gary Lineker wins his case. HMRC continues to carry out a witch hunt on high profile media stars and fails to grasp the simple concept that there is a freelance premium, and because of this, freelancers end up generating more in tax by operating this way compared to employment.
“HMRC should be thanking freelancers for their contributions, not victimising them as tax avoiders using this cruel legislation.”
Similar sentiment was shared by Seb Maley, the CEO of Qdos, who issued a stern warning to freelancers, self-employed workers and contractors across the UK.
Seb concluded: “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. But it’s not the first time HMRC have pursued a well known TV presenter, and I doubt it will be the last.
“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.
“HMRC’s understanding of the IR35 rules and their track record in tribunals leaves a lot to be desired. So I wouldn’t be too surprised if it’s found that Lineker is genuinely self-employed and HMRC have got things wrong yet again.
“This case also highlights the potential risks of non compliance – not just to freelancers and contractors, but also to businesses that engage them. It’s vital that well informed IR35 status decisions are made from the outset.”