It's wrong to celebrate others troubles.. | Vital Football

It's wrong to celebrate others troubles..

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But, I have to say this is one instance where I can only applaud the inland revenue for bringing this tax-avoidance nonsense to an end...after the borrowings this country has been forced into, schemes and arrangements like this in public bodies MUST be ended.


Game on as taxman goes after Gary Lineker for £5 million

David Byers, Assistant Money Editor
Friday May 07 2021, 9.00am, The Times
Personal finance
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The taxman claims that Lineker, 60, owes £3.62 million in income tax and £1.31 million in national insurance



Gary Lineker, the television presenter and former England footballer, is being pursued for £4.9 million in tax and national insurance in the most high-profile battle so far between HMRC and celebrities over their employment status.

The taxman claims that Lineker, 60, owes £3.62 million in income tax and £1.31 million in national insurance because he should have been taxed as a direct employee of the BBC, where he presents the Match of the Day highlights programme, and the sports channel BT Sport, where he presents coverage of the Uefa Champions League.

Instead, he has worked as a contractor through Gary Lineker Media, a company he set up in 2012 jointly with his ex-wife Danielle Bux, which means that he would have been remunerated partly in dividends, paying a lower rate of tax. In court documents released yesterday prior to a first-tier tax tribunal, HMRC put Lineker’s precise bill at £3,621.735.90 in income tax and £1,313,755.38 in national insurance for work undertaken during the periods of 2013-17 to the BBC and 2015-18 for BT Sport.



Although it is not known how Lineker chose to split his income through Gary Lineker Media, contractors usually receive their pay through their companies and then pay their income to themselves partly in dividends, for which the additional tax rate is 38.1 per cent instead of the 45 per cent income tax rate. They also save money on national insurance, which employees and employers normally pay.

A source close to Lineker described the proceedings as “a shambles” and stated that he strongly disputed the figures HMRC said he owed, and owed only a fraction of the sum.

“Being paid through a personal service company is quite legitimate if the revenue accepts that you are genuinely a self-employed individual,” Robert Salter, an adviser at the tax firm Blick Rothenberg, said. “In the simplest terms, whether or not you are genuinely self-employed or an employee in another name is the revenue’s bone of contention in these cases.”

The former Tottenham and Leicester City striker was the BBC’s highest-earning star in the 2019-20 tax year, with an annual salary of £1.75 million, but the corporation announced in September that he had agreed a £400,000 pay cut.

The court battle is the highest-profile tax tribunal confrontation yet between HMRC and celebrities who work as freelancers through their own companies but who the taxman claims are, in effect, employees and so ought to be paying more tax.

Eamonn Holmes, 61, the television presenter, faces a £250,000 tax bill after losing his case, while Lorraine Kelly, 61, his former co-presenter, won a similar case for an estimated £1.2 million. In February Kaye Adams, 58, the host of ITV’s Loose Women, also won her case over a tax bill of £120,000.



Freelancers’ representatives said that the taxman’s pursuit of Lineker was unfair because the BBC had been the main beneficiary of his arms-length employment status by saving on the employers’ slice of national insurance.

Dave Chaplin, chief executive of Contractor Calculator, a body representing contractors, said: “The tax efficiency by hiring someone self-employed is actually obtained by the firm that hires them, in this case the BBC, who would have avoided having to pay employers’ national insurance of 13.8 per cent on top of whatever moneys were paid to Mr Lineker. To suggest that he has avoided tax is pointing the finger in entirely the wrong direction.”

Seb Maley, chief executive of Qdos, another contractor body, said: “This case highlights the potential risks of non-compliance — not just to freelancers and contractors, but also to businesses that engage them.”

Under the Treasury’s new contractor tax rules, known as IR35, which came into force last month, all “off-payroll” workers must be treated as full-time employees by their companies, with medium and large businesses in the UK responsible for setting the tax status of contractors they hire. This had already been the case in the public sector since 2017.

An HMRC spokesman said: “We do not comment on identifiable taxpayers or ongoing legal proceedings. HMRC has recently won a number of important cases, including at the upper tribunal, which set a useful precedent and give welcome clarity to taxpayers and HMRC alike.”
A spokesman for Lineker said that the true tax bill he faced was much smaller than HMRC’s declared total because he had paid much of it had already. “The tax involved is a nominal amount and he is appealing it.”

A date for the tribunal has not yet been set.

Limited liabilities
• HMRC is pursuing freelance presenters for tax using legislation known as IR35, which is designed to crack down on tax avoidance by so-called disguised employees.
• The taxman says that by working through the structure of limited companies instead of as direct employees, contractors avoid paying substantial amounts of income tax and national insurance.
• This is because after being paid their wage by their television station via their limited companies the stars will then only funnel themselves a small percentage as income and the rest as dividends. This has tax benefits for the worker because dividend taxes are much lower than income tax rates. The basic rate dividend tax rate is 7.5 per cent, while the highest-rate level is 32.5 per cent and the additional rate is 38.1 per cent. By contrast, the regular income tax rates are 20 per cent, 40 per cent and 45 per cent.
• Presenters are furious. Many say that they were encouraged to work this way by the TV companies themselves who saved significant sums in national insurance by not employing them directly.
• Under new rules which were put in place last month, medium and large private sector businesses in the UK have become responsible for setting the tax status of contractors they hire — a situation that has already been the case in the public sector since 2017. The Treasury expects the change to raise £3 billion by 2024.
• Contractors have complained that IR35 is reducing the earnings of ordinary workers by 25 per cent and is making them give up flexible working. Businesses claim that the changes are costing them millions of pounds in administration costs after the Covid-19 crisis.
 
I know ir35 rules have changed this year but this feels a bit like the usual sporadic scapegoating of a high profile celeb exploiting a legal course to pay less tax...

Reminds me of this David Mitchell rant:

That said I know a company who can no longer employ all the freelancers they've been using because of the ir35 rule changes. Whole industries are struggling to pivot to the new rules, so only fair the fatter end of that wedge feel the pinch too.
 
I can't help but think that if the rules around tax was more clear and obvious that it would make it both easier to catch people who break/bend the rules and prevent others from attempting to do so.

Out Tax system has been crying out for route and breach reform for the last 4 decades, now is the time that it has to be done, then 'celebs' (and others) who play this game would have to pay their fair share - something that they haven't done for a considerable time.

I do not begrudge paying tax, I try and maintain my tax affairs well, for a few years I was paying around £250k a year in tax, and was advised to do some similar sheltering from income tax - it was a highly attractive proposition and one easy to succumb to, in the end much to my advisors surprise I said no - and that was a painful and costly decision but it felt to me that morally I had no right to depive others who relied upon my contributions - which is why I still get angry at the shenanigans of the super-rich and the global Tech/US companies that frankly take the piss - most especially with how they've used Ireland as a tax-haven to avoid paying local corporation tax.

Amazon for example - the destroyer of local retailers t/o 44 billion in 2020 and paid nothing in corporation tax - this cannot be allowed to carry on. We are literally and have allowed them to have a huge tax advantage that destroys a competitive market.

Hence why I believe we have to demand changes to our tax system to a fairer and transparent one. So even at Linekars level, I'd like to see them made an example of.

End of rant lol!
 
Out Tax system has been crying out for route and breach reform for the last 4 decades, now is the time that it has to be done, then 'celebs' (and others) who play this game would have to pay their fair share - something that they haven't done for a considerable time.

I do not begrudge paying tax, I try and maintain my tax affairs well, for a few years I was paying around £250k a year in tax, and was advised to do some similar sheltering from income tax - it was a highly attractive proposition and one easy to succumb to, in the end much to my advisors surprise I said no - and that was a painful and costly decision but it felt to me that morally I had no right to depive others who relied upon my contributions - which is why I still get angry at the shenanigans of the super-rich and the global Tech/US companies that frankly take the piss - most especially with how they've used Ireland as a tax-haven to avoid paying local corporation tax.

Amazon for example - the destroyer of local retailers t/o 44 billion in 2020 and paid nothing in corporation tax - this cannot be allowed to carry on. We are literally and have allowed them to have a huge tax advantage that destroys a competitive market.

Hence why I believe we have to demand changes to our tax system to a fairer and transparent one. So even at Linekars level, I'd like to see them made an example of.

End of rant lol!

good post but I won't get mad at footballers and celebs exploiting grey areas when Amazon and the like are allowed to carry on what they're doing.
 
Out Tax system has been crying out for route and breach reform for the last 4 decades, now is the time that it has to be done, then 'celebs' (and others) who play this game would have to pay their fair share - something that they haven't done for a considerable time.

I do not begrudge paying tax, I try and maintain my tax affairs well, for a few years I was paying around £250k a year in tax, and was advised to do some similar sheltering from income tax - it was a highly attractive proposition and one easy to succumb to, in the end much to my advisors surprise I said no - and that was a painful and costly decision but it felt to me that morally I had no right to depive others who relied upon my contributions - which is why I still get angry at the shenanigans of the super-rich and the global Tech/US companies that frankly take the piss - most especially with how they've used Ireland as a tax-haven to avoid paying local corporation tax.

Amazon for example - the destroyer of local retailers t/o 44 billion in 2020 and paid nothing in corporation tax - this cannot be allowed to carry on. We are literally and have allowed them to have a huge tax advantage that destroys a competitive market.

Hence why I believe we have to demand changes to our tax system to a fairer and transparent one. So even at Linekars level, I'd like to see them made an example of.

End of rant lol!
Ex, when my/our company was going successfully my/our Chartered suggested the same, told him in no uncertain terms where to go, plus sacked him, I never wanted to be forever looking over my bloody shoulder.

Plus I can look people in the eye and give honest opinions regards tax, simple as that.
 
In the large corporation situation, the problem is the lack of international uniformity in taxation.

Biden and Yellen have started to move toward a cooperative environment globally.

I also do not think it is right to short-change the government that is providing services where you are effectively domiciled.

I also think that we will have developing nation low tax jurisdictions that use a competitive tax environment to attract investment and I don't think that developed nations should punish those countries for raising the standard of living of their citizens.

I am ambivalent about Lineker. I do not think it is right to retroactively re-interpret tax law. Lineker should be forced to change his structure but not penalized for a lack of clarity. If he is earning from multiple sources then he is, arguably a contractor. Any argument to the contrary is wrong. If he is only earning from one source, the BBC, then he is definitely an employee.
 
In the large corporation situation, the problem is the lack of international uniformity in taxation.

Biden and Yellen have started to move toward a cooperative environment globally.

I also do not think it is right to short-change the government that is providing services where you are effectively domiciled.

I also think that we will have developing nation low tax jurisdictions that use a competitive tax environment to attract investment and I don't think that developed nations should punish those countries for raising the standard of living of their citizens.

I am ambivalent about Lineker. I do not think it is right to retroactively re-interpret tax law. Lineker should be forced to change his structure but not penalized for a lack of clarity. If he is earning from multiple sources then he is, arguably a contractor. Any argument to the contrary is wrong. If he is only earning from one source, the BBC, then he is definitely an employee.
Not in the same league obviously , but the taxman came down hard on me when I was on my tools .
I was subcontracting myself to one company so they tried to tax me as an employee .
I had to prostitute myself out to another company for peanuts to overcome the problem .
 
In the large corporation situation, the problem is the lack of international uniformity in taxation.

Biden and Yellen have started to move toward a cooperative environment globally.

I also do not think it is right to short-change the government that is providing services where you are effectively domiciled.

I also think that we will have developing nation low tax jurisdictions that use a competitive tax environment to attract investment and I don't think that developed nations should punish those countries for raising the standard of living of their citizens.

I am ambivalent about Lineker. I do not think it is right to retroactively re-interpret tax law. Lineker should be forced to change his structure but not penalized for a lack of clarity. If he is earning from multiple sources then he is, arguably a contractor. Any argument to the contrary is wrong. If he is only earning from one source, the BBC, then he is definitely an employee.

that's not how the new rules work though. I've not looked into it as not relevant to me, but others have mentioned to me that they're making it about if you use your own equipment and whether you pick your own hours & etc. Number of companies you work for is irrelevant.

Obviously for illustrators or whatever this is going to be a massive pain.
 
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Let's brand it the way it should be branded... it is criminal.


It isn't. It's legal. And it is a result of globalization. Tax law/policy and cooperation between tax jurisdictions hasn't kept up. And in Amazon's case, there isn't a massive tax loss as their historical margins have been so tight they aren't ridiculously profitable....although they are getting better.
 
The Lineker scenario will not happen here on through because the onus on deciding if someone is an employee or not is with the hirer. If they get it wrong then they pick up the tab.
However in the last number of years this has been a really hot potato. The difficulties were that there were no hard and fast rules and the legislation that was/is being used was not designed for these circumstances. There are many different criteria taken into account previously such as master servant relationship, who is one answerable to, holidays and any related reward, equipment supply, commercial risk, number of clients, can the engagees be substituted plus various other aspects.
The advantages of a personal service company may be overstated however. The main advantage is potentially having one’s wife as a shareholder and employee as well thus splitting income and gaining added allowances, but remember if dividends are the main source of income for the individuals involved, they can only be paid out of profits which will have already suffered corporation tax. Then the individuals suffer tax on those dividends at whatever their particular marginal rates are. The advantage isn’t always as great as it may be perceived!
 
that's not how the new rules work though. I've not looked into it as not relevant to me, but others have mentioned to me that they're making it about if you use your own equipment and whether you pick your own hours & etc. Number of companies you work for is irrelevant.

Obviously for illustrators or whatever this is going to be a massive pain.

Those rules will be tested.
 
Not in the same league obviously , but the taxman came down hard on me when I was on my tools .
I was subcontracting myself to one company so they tried to tax me as an employee .
I had to prostitute myself out to another company for peanuts to overcome the problem .
Yes Walt I remember that, it was Blair and his Union cronies fault....
Saying SE workers if working for one company should be classed as Employees, because they had no responsiblities.
So we as a company who only used SE Formworkers, Steel fixers and skilled Concrete labourer's, consulted an Employment Law Lawyer, as many other Subbie Companies did, thus the Engagement rules Contracts, accepting responsibility of their work, came in, each and every subbie had to sign these before commencing work on each and every job/contract, yes loads more paperwork, but it worked.
Have no idea what it is like today, as am out of it.