Having previously considered issues associated with IR35 on this website, we now comment upon the high-profile IR35 challenge being undertaken by HMRC with Tax Tribunal Proceedings involving the former England footballer and TV presenter Gary Lineker.

Kangs Solicitors has been representing individuals and businesses in relation to HMRC Investigations and Tax Tribunal Proceedings since 1997 and we have a proven track record in bringing cases to a successful conclusion.

We have a long history of being highly recognised by the leading law directories, the Legal 500 and Chambers & Partners, for our work in relation to allegations of financial and tax fraud. The current edition of the Legal 500 (2021 edition) recognises that:

‘Kangs has substantial experience…routinely handles multi-jurisdictional financial investigations. It is regularly instructed by a wide range of PLCs, corporate and individual clients on a national basis.’   

Our team is led by Hamraj Kang an award-winning solicitor who has been ranked as a ‘star individual’ for five consecutive years by Chambers & Partners for his work in financial investigations.

For an initial no obligation discussion, please call our Team at any of our offices detailed below:

Hamraj Kang discusses issues concerning the IR35 legislation.  

What is IR35? | A Short Recap | Kangs Tax Solicitors

IR35 was introduced by The Finance Act 2000 in an effort to control ‘disguised employment’ by preventing an individual avoid tax by purporting to be self-employed or freelance when, to all intents and purposes, that person was an employee of a company governed by a work contract.

  • Invariably, the individual seeking to minimise tax liability would operate through a limited company set up to receive the contracted payments. The limited company would pay corporation tax resulting in a tax liability lower than would have been the case if the income been taxed at personal tax rates. In addition, the individual would receive payment through that company by way of dividends thereby reducing the tax burden given that dividends are taxed at a lower rate than the higher tax rate for personal taxation.  
  • Not only does the drawing of dividends avoid liability to pay National Insurance on the part of the individual, the company also saves money as it is not liable for payment of ‘Employer’s National Insurance’ which is currently charged at 13.8%.
  • As a result, for an individual operating ‘within the scope of IR35’ via a limited company, the level of tax liability can be mitigated significantly.
  • The purpose of IR35 is to prevent abuse of the taxation system.
  • IR35 affords HMRC the power to collect under-paid tax liabilities which have accumulated through such conduct.

Gary Lineker Tax Tribunal | Kangs HMRC Defence Solicitors

HMRC asserts that Gary Lineker has been a ‘disguised employee’ of his business from 2013 to 2018 in relation to the work he performed for the BBC and BT Sport as a TV presenter.

HMRC is seeking to recover a total of £4.9million, comprising £3.6million in income tax and £1.3millon in national insurance contributions.

HMRC’s Recent Approach To IR35 Investigations | Kangs Solicitors

In recent years HMRC has taken a robust, and some may say an aggressive approach, to IR35 investigations targeting some high-profile taxpayers such as TV personalities Lorraine Kelly and Eammon Holmes.

The approach has had mixed success for HMRC, such as achieved in the proceedings involving Eammon Holmes, whilst, in others, the Tax Tribunal has ruled that the taxpayer was genuinely self-employed, and not an employee, such as the proceedings involving Lorraine Kelly.

Clearly, there is scope for dispute in many cases as to the actual employment status quo of an employee with the result that it is important to consider the specific facts of each situation.

As each case will be fact-specific, it is essential to seek immediate legal advice from an experienced solicitor who can assess the overall case and advise on its merits.

There are common factors that arise in IR35 investigations which will usually need to be considered alongside unusual or additional factors discrete to the investigation being conducted.

HMRC will usually apply three main principles in its assessment:

  • Control: who is in control – what degree of control does the ‘employing’ contracting party have over the nature of and how, when and where the individual completes the work?
  • Substitution: is personal service by the individual required, or can the individual send a substitute to conduct such work?
  • Mutuality of obligation: arising where the employer is obliged to offer work and the individual is obligated to accept it.

Other factors which HMRC may consider include the:  

  • nature of the contract,         
  • time and pay,
  • conduct of the parties,
  • intention of the parties,
  • exclusivity – does one party enjoy exclusivity or are there shared obligations?
  • party responsible for provision of equipment,

Consequences of Non-Compliance For An Individual

If HMRC deems that the individual is a ‘disguised employee’, there are potentially very onerous financial consequences including payment of the income tax and national insurance contributions which have been avoided plus financial penalties for non-payment and interest.

Consequences of Non-Compliance For A Contracting Party

Rule changes to the IR35 legislation were introduced in April 2017 (for the Public Sector) and in April 2021 (for the Private Sector) which placed greater responsibility and financial consequences on the contracting party to ensure that the individual does not fall under the definition of a ‘disguised employee’. For details please follow For details please follow this link to our previous article: IR35 Rule Changes

The period under consideration in the Gary Lineker case is up to and including the tax year 2017/8. Therefore, the ‘old rules’ apply meaning that Gary Lineker will be responsible for any shortfall in tax or national insurance that the Tax Tribunal may find is owed.

Had the period in question been after the amendment of the Public Sector organisations legislation in April 2017, any final Tax Tribunal Ruling in favour of HMRC, would have resulted in the BBC, as a Public Sector organisation, being responsible for payment of any outstanding ‘employer’s national insurance contributions’, which with the prevailing rate of interest being 13.8%, could have amounted to a substantial amount of money.

Our Experience in HMRC Tax Investigations | Why Choose Kangs Solicitors?

The team at Kangs Solicitors has:

How to Contact Us | Kangs Tax Specialist Solicitors

We appreciate the difficult strain that a HMRC tax investigation can have on a client, a business and family. We aim to work proactively with our clients in an effort to secure an early favourable resolution with HMRC to the problems with which they are confronted.  

Hamraj Kang leads an award-winning team of solicitors nationally reputed for its excellence in HMRC civil tax enquiries and criminal investigations.

We welcome new enquiries by telephone or email.

Our team of lawyers is available to meet at our offices in London, Birmingham or Manchester or, alternatively, we are happy to arrange an initial no obligation meeting via telephone or video conferencing.

For initial enquires please contact:

Hamraj Kang
hkang@kangssolicitors.co.uk
07976 258171 | 020 7936 6396 | 0121 449 9888

John Veale
jveale@kangssolicitors.co.uk
0161 817 5020 | 0121 449 9888

Tim Thompson
tthompson@kangssolicitors.co.uk
020 7936 6396 | 0121 449 9888