Gary Lineker’s recent suspension by the BBC, for a tweet from his personal account said to breach the BBC’s impartiality rules, and his £4.9m HMRC tax inquiry, widely reported in the national press earlier this month, are a timely reminder of the grey areas surrounding the employment status of individuals who provide their services as “freelancers”.

Leaving aside the content of Lineker’s tweet and whether it breached the BBC’s impartiality rules, much of the furore seemed to be about the way in which it was handled. Much criticism was aimed at the BBC’s apparently inconsistent approach to the application of its editorial and social media guidelines to freelancers. The BBC dealt with Lineker swiftly and, many say, unfairly, by suspending him from MOTD presenting duties. Reports alleged that, when it had responded to previous complaints relating to the social media content of other freelancers, the BBC has been quick to state that they are a freelancer whose twitter account is a personal one and the BBC is not responsible for its content – a very different approach to the suspension of Lineker.

It seems that the matter has now been resolved with the BBC making an apology within a matter of days and Lineker to return to presenting duties. However, the BBC has acknowledged that it had been a “challenging” few days and a reported BBC email to all staff reflects on “a difficult balancing act to get right where people are subject to different contracts and on-air positions, and with different audience and social media profiles”. Acknowledging that there are “grey areas which has caused confusion”, the BBC has announced that it will arrange an independent review of its social media guidelines with a focus on how it applies to freelancers such as Gary Lineker.

What is a freelancer?

“Freelancer” is a term commonly used in the media and entertainment sector for someone who is not directly employed, i.e. an “off-payroll” worker. Typically, a freelancer will contract on a job or project basis, invoicing for their fee and often providing services to more than one client. However such terminology is not indicative of employment status for tax and employment rights purposes. The term freelancer does not, in fact, have a legal definition when it comes to the assessment of employment status.

For tax purposes there are only two types of employment status: employed or self-employed. For employment rights purposes, there are three: Employee, worker and self-employed, with employees enjoying the greater employment protections but “workers” also benefitting from such rights as paid holiday. This can cause confusion. A freelancer may, for example, be self-employed for tax but still have employment law rights as a worker or even an employee.

What is the test for an employment contract?

The employment status tests for tax and employment rights purposes draw on much the same principles and case law but are not identical. Again this can be problematic. The core tests for a contract of employment are:

  1. The individual provides their own work and skill in return for a wage (personal service and mutuality of obligation)
  2. There is control over the individual in the performance of that service in terms of what must be done, when, how and where
  3. There are other factors in the provisions or arrangements which are consistent with a contract of employment

In relation to the 3rd stage of the test above, there is no exhaustive list of the factors to be taken into account or the relative weight to be attached to each factor. Factors can include, amongst other things, whether they provide their own equipment, the ability to engage their own staff to assist, whether any financial risk is taken, whether they operate in business, whether they market their services to others, the degree of continuity of the services being provided, whether they have the opportunity to profit from sound management in the performance of their task and/or whether they are “part and parcel” of the organisation to which they provide services. Each case will turn on its particular facts and this is why it is so difficult for a business to definitively assess the employment status of its off-payroll workforce.

Turning back to Lineker’s tweet, a degree of control over social media posts may be an indicator towards employment rather than self-employment. Notably, the tax tribunal held in a 2022 case that BskyB’ control over one of its commentator’s use of social media was one of the factors pointing to employment for tax purposes (Alan Parry Productions Ltd v HMRC [2022]UKFTT 194 (TC)).

What is the tax issue?

Gary Lineker’s tax case concerns employment status for tax rather than employment rights. HMRC’s position is that Lineker should have been classed as an “employee” in relation to his presenting duties for the BBC and BT Sport. Lineker disputes the £4.9m in tax in question and his legal team has argued that HMRC should have assessed the BBC for tax and that HMRC is looking in the “wrong place”.

The detail of the case is not known so no comment is given on the merits of either sides’ argument. However it does demonstrate how careful thought must be given when engaging services off-payroll.

IR35 has been raised as Lineker provided his services through a partnership. “IR35” being the colloquial term for legislation which targets “disguised employment”, where an individual provides their services to a client through their own intermediary – usually a limited company – when they would otherwise be an employee of the client if they had a direct contractual relationship with them.

IR35 is not a new concept. It takes its name from Inland Revenue press release number 35 of 1999 which outlined the then government’s plans to address the reduced rates of tax and NICs being paid by those providing their services through their own intermediary. The aim is to ensure that they pay broadly the same income tax and NICs as an employee would. IR35 has never been particularly popular, with contractors arguing that the tax break for being a contractor was balanced against the fact that they did not enjoy the security, benefits and employment rights of employees.

Under the original IR35 rules the onus was on the contractor, through their limited company, to assess employment status for tax and make the appropriate income tax and NIC payments in relation to the services. New rules were introduced in 2017 where the services were provided in the public sector so that, rather than the individual and their limited company making the assessment of employment status, the public sector end user of the services had to make a status determination.

In 2021 the rules were expanded further to apply where the end-user of the contractor’s services is a medium to large private sector entity, bringing far more off-payroll working arrangements into the scope of the rules. Indeed, an HMRC report in December 2022 indicated that additional revenue generated from the extension to the IR35 off-payroll rules is around £1.8 billion.

Under the new IR35 rules, if certain conditions are met, liability for assessing the employment status for tax now falls to the client or end-user of the services. If the client assesses the individual to be in “deemed employment” i.e. that they would have been an employee if they had not been providing their services through an intermediary, income tax and NICs will apply to the fees that the individual’s limited company receives for the services to the client. There are then various obligations with which the parties in the contractual supply chain must comply or face financial and administrative consequences, including to withhold and account for the correct income tax, NICs and apprenticeship levy (if applicable) to HMRC.

Audit your off-payroll workforce

Organisations receiving services from individuals on an off-payroll basis whether as “freelancers” “consultants” or “contractors” should carefully and regularly review the arrangements that are in practice, as well as the contractual arrangements, with those workers on a case by case basis. The review should consider both the employment rights and employment tax position. Consider which policies and procedures should apply to those workers, as well as to your employees but beware creating a scenario where such requirements might suggest more of an employment relationship as this may jeopardise both the tax and employment rights position.

The audit should cover all off-payroll workers whether you contract directly with self-employed individuals or through their intermediary. IR35 rules may not apply to those directly engaged as self-employed (because there is no intermediary) but you will still need to ensure that they are genuinely self-employed otherwise the tax and employment liabilities will fall to you.

Our Employment team has considerable experience in advising on employment status, providing guidance on the IR35/off-payroll working rules, reviewing contracts with off-payroll workers and assisting with employment status assessments. Should you require any assistance with regards to the engagement of off-payroll workers, please do not hesitate to contact partner Clare Gilroy-Scott or any member of the Employment team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.

Please also see a copy of our terms of use here in respect of our website which apply also to all of our blogs.

Latest Blogs See All

Share by: