Just pay your effing tax Lineker! https://www.theguardian.com/footbal...say-hmrc-tax-probe-looking-in-the-wrong-place
The IR35 legislation is not fit for purpose though. It's also impacting on the flexibilty of the workforce in the uk hence why it was going to be scrapped by Kwasi Karteng. It's not that he won't have paid any tax more around how much tax he has paid. The tests that determine if you are deemed self employed or an employee are very subjective. There's no checklist of things that determine categorically one way or the other. The Inland Revenue don't often win these types of cases either. The other point is, he's actually paid the tax (as stated in the article)
If he'd paid his taxes in the first place, why would HMRC be after him? He clearly tried a "Zahawi" and ended up paying anyway.... All of which simply serves to waste tax payers' money on costly legal action.
Because the revenue and Lineker have a different opinion on if he is employed or self-employed because as already mentioned, the legislation isn't fit for purpose and is completely subjective. The usual option to prove that this isn't the case is via a long protracted court case to show that the contractor is in fact a legitimate business . Again not fit for purpose and very costly.
It’s a totally different situation as Gally says the legislation in this area is awful and I very much doubt that Lineker can be classed as an employee for tax and ni purposes
At it's most basic, there are 2 key factors that are sticking points. 'Disguised employment' ........ i.e. are you doing a job that could be done by a permanent member of staff? This is why IT contractors are wrongly chased so often, because they tend to do projects that have a specific timeframe and won't be needed on project completion. I guess Lineker could argue he works on 'multiple projects' (BBC, BT, private production companies etc) and as such he could be considered freelance. '2 year rule' ........ similar to above. If you are working on a single customer for more than two years, then you are basically a permy and should pay PAYE and NI as permy staff do. And receive the corporate benefits that they do to (as a freelancer / contractor you pay for your own expenses, training, holidays etc). Although Lineker has worked for BBC for years, I guess the fact that he covers his employment status by multiple engagements, then he is fine. My guess though is that there is a case for him to be deemed 'inside IR35'. 'Outside IR35' I think is a perfectly legitimate way of working as long as you respect the two points above. It gives me flexibility. I pay less PAYE than a permy, but I guess my overall contribution to the UK tax 'pot' is more; i.e. Corporation Tax, VAT etc ..... plus the PAYE that inevitibly becomes payable. 'Inside IR35' as an IT contractor I simply see no point. Apart from the PAYE being more aligned to a permy, the VAT & Corp tax liability remains and there are still none of the corporate perks like holiday, bonus, training. It would take a big 'inside' rate to make me consider one of these contracts; that is not greed, it simply keeps things aligned.
I was briefly an IT contractor (2014/15) firstly at Jaguar Cars, then at the Steel Works in Scunny. I was advised not to pay myself a salary (I already had 40 years of NICs) and just took dividends. I'd say that on the whole, I paid pretty much the same tax as a permie. The only slight advantage was VAT, at the time I was only paying 14% but charging 20%, I seem to remember it was a scheme to help new start ups. The whole IR35 thing was kicking off at that time.
Yes, there was a fixed rate one that I missed out on for VAT. There's no denying there was money to be made in contracting a fair few years back; almost unlimited dividends with little or no tax. It's all changed now, and it is not the gravy train some think it is. I can see the Lamborghini going ..... ;-)
I’m a contractor in finance and have worked for various agencies within various banks/financial institutions. IR35 has led to them all (at least the ones I’ve worked for) insisting I work using an umbrella company (as a pseudo employee of the client) rather than a PSC (LTD company). Even short term stuff which won’t get to anything like 24 months, they just insist everyone use an umbrella to save them any aggro. LBG made me switch to umbrella a year before IR35 was meant to be implemented - and it then got delayed another year as well but they had already implemented the rule. So I’ve had to use umbrellas for a good while, more than the last three years, excepting six months I was on the books somewhere. I’d used umbrellas in the past too. Exceptionally inefficient and expensive compared to the PSC. With the vat, corporation tax and income tax on my dividends the exchequer took in more money when I was a sole director of my ltd company than they do from me now in income tax and national insurance. They’ve lost out. And my net income is down nearly 20% like for like on the same day rate. So who wins? IR35 was legislation drawn up to make it look like the tories were chasing tax dodgers without them actually chasing the people/entities that really owe anything significant. (I’ll be fair, my example isn’t necessarily reflective of the majority. For many examples I’m sure the exchequer will take in a bit more income due to IR35, I didn’t offset vat or other taxes with inflated expenses etc - but it is still a dead cat of a policy. A distraction, a con to make it look like they want to stop tax avoidance, nothing more. The truth is they are quite happy for the large corporations who sponsor them to pay 20p in the £1000 rather than 20p in the £1. It’s achieved nothing except to make contracting less attractive and cost them a lot in legal fees when they inevitably lose a lot of cases when people prove they aren’t pseudo perm employees as they have flexible gigs from various sources - and besides which I can assure you, very many businesses wouldn’t function without the availability of a flexible workforce so it is in nobody’s interest to kill off contracting. With the effect they’ve had on people leaving contracting and the fact it brings in an often negligible amount more money, I reckon IR35 has cost millions rather than raised it). As for the OP, Lineker has paid, but it wasn’t the headline figure of £4million plus - it was actually the difference they calculated from what he’d paid through his company (which they initially hadn’t traced) and the PAYE figure, which wasn’t anything like as high, and I’d also wager he’ll get every penny back as well as there are plenty of precedent cases where the tv presenter has won - for example Lorraine Kelly, who I’ve only ever seen on ITV. I’m sure Lineker, with his separate contracts for different things at the bbc, and stuff with bt and abroad, plus the fact his gigs are seasonal and not year round, won’t find it difficult to prove he isn’t anybody’s direct employee. It’s funny, IR35 ensures tax is paid akin to a perm employee as apparently I’m a perm employee in all but name. Yet bizarrely I have a contract only until the end of next month, I am entitled to no redundancy or severance, and get no sick or holiday pay (unless I ask the umbrella to underpay me and keep some of my rate back to pay future holidays…); I even have to pay the employer’s contribution to NI as well as the employee’s. In what way am I employed?
I worked for Jaguar Cars as a permie for 23 years, and in that time, I worked with many contractors some of whom were there longer than many other permies (some almost as long as I was there). One lad I worked with was on almost double my daily rate so even after you allow for sick pay and holidays etc, he was substantially better off than me (we were at the same level as developers). I think part of the reason for the IR35 rule was to stop that, which I guess it has.
The issue there was Jaguar underpaying staff and over paying contractor day rates though, surely, not tax legislation? IR35 might have levelled out your net pay a bit - but only by reducing the contractor’s net income, not increasing yours. Cost to jaguar roughly the same, so they would be shelling out nearly twice the day rate for him - he just wouldn’t see as much of it and a decent chunk is lost in a layer of admin and umbrella fees - not even getting into the government coffers. The VAT claimed and then paid usually boosted the taxman’s share quite a bit; none of that now. And anyway - first rule of contracting - never discuss your day rate! Always pisses perms off, even when most of the time you are no better off at all when all is considered.
I know a lad called Santosh at LBG who went through exactly what you describe and is now essentially stuck inside.
I never said that I was poorly paid, I was on a very decent salary. But for some reason they were prepared to seriously overpay for contractors. One or two were understandable because they had specific skills that the company needed but on the whole they just seemed to like having contractors. I suppose that when times got tough, they could more easily get rid of contractors. I found that out at Tata Steel in December 2015, I was the last contractor out after I finished the project I was working on.
