HMRC believed off-payroll IR35 tax rules applied to Lineker as he should have been classed as an employee, rather than a freelancer, in contracts with the BBC and BT Sport
However Lineker's contracts with both channels were made through his partnership, Gary Lineker Media (GLM), set up with ex-wife, Danielle Bux.
Seb Maley, CEO of tax consultancy Qdos, explained: “The decision hinged on Lineker signing the contract himself, as both the worker and a principal of his partnership.
“If his partner, Danielle Bux, had signed, IR35 could have come into the equation.
“Just when we thought IR35 couldn’t get any more complex, this ambiguous, fundamentally flawed legislation surprises everyone.”
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Speaking to HR magazine Dave Chaplin, CEO of tax compliance firm IR35 Shield, said the complexity of Lineker's case highlighted the need for firms to have expert representation in place when dealing with IR35.
He said: “Gary Lineker’s case is unique, in that he structured his affairs via a Limited Liability Partnership and entered into a direct contract with the BBC and BT Sport. Therefore, IR35 did not need to apply.
“However, even HMRC failed to entertain this legal argument during its investigation. Therefore, it’s important to ensure firms are properly represented when HMRC knock on the door, because handling IR35 enquiries is very complex, and hard to shut down early – even when there’s an obvious knockout blow, as there was for Gary Lineker.”
The case has renewed calls for IR35 reform, as critics complain of a lack of clarity around the rules.
Waqar Shah, tax disputes partner at law firm Kingsley Napley, said: “IR35 is such a wide-ranging regime with lack of clarity embedded in the rules that it is unsurprising it is increasingly an area for dispute with HMRC.
“Until the government puts reform of IR35 back on the agenda, we will continue to see high profile disputes of this nature.”
Until February this year, the tax collector’s office had also been in a three-year pursuit with another contractor.
In this case, HMRC’s own Check Employment Status for Tax (CEST) tool had shown the contractor operated outside IR35, yet it still claimed they owed £100,000 in unpaid tax.
Despite ongoing complications with the legislation, an HMRC study of IR35 published in December 2022 found most organisations found it easy to comply with the rules as set out in 2021.
