Why Gary Lineker’s win over HMRC isn’t an IR35 victory for contractors

In football terms, my old employer HMRC wasn’t even ‘in the box’ or within ‘shooting distance’ with its £4.9million demand that ex-professional footballer Gary Linker pay up under IR35, and for quite technical reasons, writes former tax inspector Carolyn Walsh.

Granted, the reference to a “third party” in the Intermediaries legislation of 2000 which HMRC alleged Lineker fell foul of for TV presenting work between 2013 and 2018, includes a partnership or unincorporated body of which the worker is a member.

So far so good?

Potentially so far so good if you’re HMRC chasing the Match of the Day presenter and his partnership Gary Lineker Media (GLM). But it’s not a cut and dried situation. In particular, section 5 of the Partnership Act provides that, “Every partner is an agent of the firm...unless the partner so acting has in fact no authority to act for the firm in the particular matter.”

In the Lineker case, that partner was Danielle Bux. When she was Danielle Lineker, she was paid a flat fee of £30,000 for ‘marketing and event attendance.’ In practice, Bux had no part in generating the income of GLM.

Lineker individually signing was significant

This wasn’t a sham arrangement, but the fact that Gary Lineker was a sole trader prior to forming a partnership (which didn’t actually meet the legal definition of a partnership), and as Lineker continued to sign contracts himself, solely and directly with the BBC, meant no third party was involved. And so, it was clear to the First-Tier Tribunal that IR35 could not apply. 

But Lineker’s win isn't an IR35 victory for PSCs and limited company contractors in general. Indeed, in the case of two or more individuals forming a partnership and supplying labour or services to clients via that partnership and all taking a share of the profits, IR35 can apply, because the partnership will be seen as the ‘third party.’

In that case (unlike the Lineker case), the classic IR35 status factors of Control, Personal Service and Mutuality would need to be considered to decide whether any or all contracts entered into by the partnership fall inside IR35.

An emboldened HMRC, and other risks...

The fact that HMRC now has a 2023 court judgment spelling out that the IR35 off-payroll rules do absolutely apply to partnerships could embolden the tax authority. There will be people out there operating today, who set up partnerships believing the structure circumvented the IR35 legislation.

So while it’s a win for Lineker – for now, this FTT appeal ruling in his favour will expose a possibly unrecognised IR35 risk for people trading in genuine partnership arrangements, meaning those which do satisfy the legal definition of a partnership, and who might otherwise be supplying services on what appears to be an employee-like basis.