IR35 and Lineker v HMRC - he thinks it’s all over; HMRC aren’t so sure…

11 April 2023

In one of the more high-profile IR35 cases involving well-known media personalities, Gary Lineker has scored a victory against HMRC in the First-tier Tribunal after Tribunal Judge Brooks found in his favour.

Although this case follows a succession of HMRC cases against well-known media presenters who were operating through some form of personal service entity, the outcome is unusual as there was no examination of the true nature of Mr Lineker’s working relationship with the BBC/BT Sport. Rather, Judge Brooks found that IR35 simply did not apply because there were “direct contracts” between the broadcasters and Mr Lineker.

The contracts in question were entered into by the relevant broadcaster on one side, and Mr G Lineker and Mrs D Lineker (now Ms Bux, his former wife) as partners in a general partnership called "GLM" on the other.

The judge found that IR35 can apply to arrangements where an individual’s services are supplied to a client through a partnership. This is uncontroversial and unsurprising; the legislation specifically provides for this scenario.

However, what came as more of a surprise was Judge Brooks’ finding that there were direct contracts between the BBC/BT Sport and Mr Lineker because Mr Lineker signed the respective contracts in his own name, albeit acting as a partner of GLM partnership, and because (applying the case of Memec Plc v Inland Revenue Commissioners [1998] STC 754) each partner acts as “both principal and as agent” (Peter Gibson LJ in Memec).

Applying this reasoning, Judge Brooks found that Mr Lineker entered into these contracts with the BBC/BT Sport as principal, notwithstanding his signing as a partner of GLM partnership, and that therefore IR35 cannot apply as it is only applicable where services are provided not under a contract directly between client and worker.

Following this logic through, Judge Brooks reached the slightly unusual conclusion that, had the contract been entered into not by Mr Lineker but only by Ms Bux as the other partner in GLM partnership, Mr Lineker would have been bound by her actions as a fellow partner and would have then been providing his services to the BBC/BT Sport solely through GLM partnership, an intermediary, meaning that IR35 would apply.

While Judge Brooks saw this hypothetical scenario as justifying his approach, it appears HMRC did not, as they have publicly stated that they are considering an appeal. 

This decision leaves some uncertainty as to the applicability of IR35 to workers providing services to a client through a general partnership. If this decision is correct and for so long as HMRC do not change the law, then, if a worker signs a services contract with a client in their own name as a partner of a general partnership, IR35 never applies as the worker can always rely on the fact that they are operating under a direct contract with the client. However, given the likelihood of an HMRC appeal and the costs involved in not complying with IR35 if the decision is overturned on appeal, a prudent worker would seek appropriate professional advice before embarking on such a strategy.

If HMRC were to appeal this point successfully, it is likely that the substantive elements of the case would return to the First-tier Tribunal, and a more familiar examination of the true nature of Mr Lineker’s working relationship with the BBC/BT Sport would ensue. In that instance, the recent fallout with the BBC could help his case, as the BBC’s seeming lack of authority to control his personal social media output would likely be considered a factor indicative of a self-employed contractor relationship.