The case of Lineker & Bux (trading as Gary Lineker Media) v HMRC [2023] involves the sports presenter Gary Lineker, and the presenting services he provided to the BBC and BT Sport.
Gary Lineker Media is a partnership (the partnership) operating under a partnership agreement. Both the BBC and BT Sport contracted with the partnership for the provision of Mr Lineker's services. Mr Lineker and his then wife (Ms Bux) signed the BBC contract as "the Partners of the Partnership". Mr Lineker alone signed the BT Sport contract 'for and on behalf of' the partnership.
HMRC considered that the IR35 rules applied to the services Mr Lineker provided under the two contracts. IR35 is a piece of legislation initially introduced to clamp down on the practice of individuals avoiding income tax and National Insurance by providing services through an intermediary and paying themselves in dividends.
Importantly, for the rules to apply, the worker must personally perform services for a client. The contract must not be a contract between the client and the worker, but must involve an arrangement with an intermediary. Intermediaries are often personal service companies but can also be partnerships.
If IR35 applies, the intermediary must determine whether the worker would have been an employee of the client but for its existence. If so, then the fees received for the worker's services must be treated as salary and will be subject to income tax and National Insurance.
Mr Lineker and Ms Bux appealed to the First-tier Tribunal against notices and determinations issued by HMRC.
The First-tier Tribunal ruled that the IR35 tax regime did not apply to the services provided by Mr Lineker to the broadcasters. It emphasised that partnerships can be intermediaries for the purposes of the IR35 rules. However, as Mr Lineker signed the contracts, he was acting as principal and had contracted directly with the broadcasters. This meant that Mr Lineker could not be said to have provided his services under a contract involving a third party, as is required under the IR35 regime
This decision highlights the fact that partnerships can technically fall within the scope of the IR35 rules. It also demonstrates the significance of the identity of the partner who signs the contract, given that if the same partner signs the contract and provides the services, this will mean that the IR35 regime does not apply.
This is a significant decision and HMRC are rumoured to be considering an appeal.