UK and International Tax news
FTT Finds For Taxpayer In IR35 Case
Thursday 30th March 2023
The First Tier Tribunal has released its decision in the first case to consider the applicability of IR35 to a general partnership.
In Gary Lineker Media v HMRC [2023 UKFTT 00340], the case concerned whether the intermediaries’ legislation (IR 35) applied to income received by Gary Lineker Media (GLM) for the provision of GL’s services to the BBC and to British Telecommunications Plc (BT Sport), for the tax years 2013-14 to 2017-18.
In September 2012, at the commencement of negotiations for what was to become the 2013 BBC Contract, there was an internal review of existing contractual paperwork by the BBC in relation to services provided by GL and the status of GLM. In particular whether it was a partnership and, if it was, to be provided with a copy of the partnership agreement. Up until 23 March 2006 GLM was a partnership, with GL’s former wife Michelle being a junior partner. When G and M separated in March 2006, M resigned as a partner, thus leaving GL as the sole proprietor.
On being informed that GL had been contracting with the BBC as a sole trader, the BBC insisted on the formation of a partnership to be the counterparty in the next contract.
In February 2013, the BBC entered into an agreement (the 2013 BBC contract) with GL and his second wife for the provision of services by GL for the period 1 July 2013 to 30 June 2016 to cover the UEFA European Championship 2016.
In June 2015, BT Sport entered into an agreement (the 2015 BT Sport contract) for the provision of GL’s services for the period 1 June 2015 to 31 May 2018 [the “2015 BT Sport Contract”]). The contract was signed by GL “for and on behalf of” GLM.
Also in June 2015, the BBC entered into a further agreement for the provision of the services of GL for the period 1 July 2015 to 30 June 2020 to cover the UEFA European Championship 2020 (the “2015 BBC Contract”). The contract was signed by both GL and his second wife.
The issues arising in the case included:
(1) whether the intermediaries’ legislation applied to arrangements involving the supply of an individual’s services to a client through a partnership governed by the Partnership Act 1890 in which the individual is a partner;
(2) whether, on the facts, GLM was a partnership;
(3) whether there was a direct contract between the BBC and/or BT Sport and GL; and
(4) whether the appellants should be estopped from contending that there was no valid partnership.
The FTT held that the intermediaries’ legislation could apply to arrangements where an individual’s services were supplied to a client through a partnership, and on the facts, GLM was a partnership. However, there were, as a matter of law, direct contracts between the BBC and GL and also BT Sport and GL. Given this, it was not necessary to determine the fourth issue regarding estoppel. as there were direct contracts between the BBC and BT Sport and GL, the intermediaries’ legislation did not and cannot as a matter of law apply. Accordingly, the FTT upheld the appeal but gave permission for leave to appeal.
It is understood that HMRC do not agree with the decision that the rules cannot apply in this case and are considering an appeal.
Contact Us