Gary Lineker and HMRC broker IR35 settlement on the hush

Gary Lineker and HMRC have settled out of court following a seven-year dispute over the football pundit’s IR35 and employment status.

Terms between the Match of the Day presenter and the tax authority were not disclosed.

An HMRC spokesperson would only tell ContractorUK:

“We’ve settled this case with Gary Lineker Media.

“All settlements we reach are fully in line with our well-established framework for resolving tax disputes.”

'Far less than £4.6m that HMRC wanted'

The ex-professional striker had been chased since 2017 for £4.6million of income tax and national insurance from presenting for BBC and BT Sport (between 2013 and 2018).

A successful HMRC would have netted from the former England footballer “far less” than the initial £4.6m, says Markel Tax.

But HMRC “may still have been clouded by the alleged tax at stake,” even though the liability would be offset by tax and NI paid by Lineker, via his partnership Gary Lineker Media, over the course of the contracts, says Markel Tax’s Danny Batey.

'Lineker may have had valid reasons to settle'

Or the undisclosed settlement could be explained by the 64-year-old television presenter potentially having “valid reasons to settle,” says Qdos.

The IR35 contract review firm’s Seb Maley pointed out last night that Lineker’s employment status never actually was “scrutinised” at the FTT.

Alternatively, as the payout to a successful HMRC would have been “relatively small compared to other high profile” PSCs, “was the Gary Lineker Media case pursued simply because of….[his very] public profile?” asks Bauer & Cottrell.

'Lineker-HMRC settlement over IR35 raises questions about LSS's application'

The status advisory’s Charlie Hemsworth is one of three tax experts who says HMRC accepting a payment to end the matter “raises questions about whether its Litigation and Settlement Strategy was applied appropriately”.

The second tax expert with concerns, Tom Wallace of WTT Group, was previously an inspector for the Revenue.

Clearly unimpressed with his former employer, he says: “The LSS is clear. HMRC should only pursue litigation when it believes there’s a strong case or significant public interest.

“Yet [in the Gary Lineker Media case] they’d already lost. The FTT found against HMRC, and appeals are meant [to be] for cases with a genuine chance of success.

“[In addition, was it the] best return for the exchequer? The LSS emphasises using resources wisely to secure practical outcomes -- not sinking time into weak cases.”

'Dogged pursuit'

Markel Tax’s Danny Batey, formerly of HMRC as well, echoed to ContractorUK:

“Given the weaknesses in HMRC’s case [against Mr Lineker]…it begs the question, can HMRC’s dogged pursuit [of him] be seen as effective use of taxpayers’ money and in accordance with the LSS?”

HMRC declined to comment -- both on whether an aspect of the LSS determined its decision to settle and whether the LSS was applied appropriately.

'IR35 settlement with HMRC isn't always on the table'

Typically, it is taxpayers rather than the tax authority who initiates the conversation around concluding an IR35 dispute with a financial settlement, says Qdos.

“That said,” caveated the firm’s boss Seb Maley, “if HMRC feels as though its chances of obtaining the full liability are limited -- whether due to the taxpayer having limited funds or because HMRC isn’t convinced it will win -- it may be tabled by the tax office.”

Maley cautioned IT contractors with tax demands under the Intermediaries legislation that discussions about HMRC settlement aren’t “always on the table.”

“It’s [also simply not] advisable if a contractor has a strong prospect of winning the case,” he advises.

“However, the reality is that IR35 cases can be long, drawn out, stressful and expensive for contractors, which can factor into their decision-making.”

'Lineker settled out of court, unlike BBC presenter Kaye Adams'

Peter Nichols, tax director at BFN Accounts and Tax, observes that Kaye Adams won her IR35 case against HMRC “after some nine years.”

On conceding to Atholl House Productions (following four separate court defeats), HMRC was criticised for letting the case drag on for almost a decade.

“[Whereas Gary Lineker’s] case has been settled out of court” reflects Nichols.

“HMRC would not disclose the details on the size of settlement, [and] it has been resolved under HMRC’s LSS.”

'Not quite a level playing field'

To Markel’s Mr Batey, cases like Atholl House prove that “HMRC are prepared to pursue cases through the courts – regardless.”

He added: “With a significant pot of taxpayers’ money at their [HMRC’s] disposal to fund their legal challenges, irrespective of the tax at stake, one could argue it's not quite a level playing field”.

The other ex-Revenue official, Mr Wallace, suggested that even though Mr Lineker might have more resources than the average taxpayer, the TV personality will still welcome the settlement.

'Lesson for contractors of the Lineker IR35 case is clear'

At Bauer & Cottrell, its director and senior tax consultant isn’t so sure (and indeed Mr Lineker, a frequent user of X, formerly Twitter, has not publicly commented).

“While we don’t know the details of the settlement, for Gary Lineker this must be a somewhat bitter-sweet relief. He’s had years of stress and legal fees, for seemingly nothing.”

Hemsworth added: “For contractors, the lesson is clear: have your ducks in a row from the start.

“Lineker’s direct contracts with the BBC and BT Sport went in his favour in this case, but the fact HMRC pursued this case after losing at the FTT shows how determined they are to test the boundaries. Watertight contracts, clear working practices, and proper advice from experts are your best defence.”

'It's time that HMRC's Litigation and Settlement Strategy had a rewrite'

Last night, Wallace suggested it was the Revenue and not contractors that needed advice.

“The settlement [between HMRC and Gary Lineker]… suggests this may have been a drawn-out battle that didn’t need to happen.

“HMRC has a crucial role in protecting the public purse, but procedural strategy is just as important as enforcement.

“Missteps like this risk wasting resources and shaking confidence in the system,” he says. “So I think it’s time the LSS had a serious rewrite as a tool for settling disputes.”