Match of the day presenter Gary Lineker has found himself the wrong side of HMRC with a potential tax bill of £4.9million.
Lineker, a former footballer who made 80 appearances for England, has been accused by HMRC of falsely declaring himself to be a freelancer in his role as a TV presenter rather than declaring his role as an employee.
This case is a typical example of the strategy adopted by HMRC to target celebrities with high profile cases to put others off the idea of trying to save tax.
But it has not always worked.
TV presenters Kaye Adams, Lorraine Kelly and Helen Fospero as well as IT consultant Richard Alcock all won their cases against HMRC , but Eamonn Holmes lost his case, though he is appealing.
The former football legend hosts Match of the Day on the BBC and BT Sport’s Champions League coverage.
Lineker and his then wife Danielle Bux set up a limited liability company ‘Gary Lineker Media’ to contract out the services of Lineker to third parties such as the BBC. The BBC then pays for Lineker’s services to his company which pays tax at 19% rather than to Lineker direct which who would then have to pay a higher rate of income tax and national insurance.
HMRC claims that Lineker owes income tax of £3,621,735.90 and national insurance contributions of £1,313,755.38.
The dispute centres around the interpretation of IR35 rules which were introduced in 2000 to crack down on people declaring themselves to be self employed when in substance they were employed.
They apply if a worker, Lineker, provides their services to a client, the BBC through an intermediary Gary Lineker Media, but would be classed as an employee if they were contracted directly.
These rules are called ‘off-payroll working rules’ and will apply on a contract-by-contract basis. Then contracts with the businesses such as the BBC for his services. The BBC then pays the limited liability company which then pays Lineker and what he does not require stays in the company with a tax rate of 19% rather than being taxed at Lineker’s top rate of income tax.
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