Michael Lynagh the latest target in HMRC investigation
Michael Lynagh, a former rugby player and occasional pundit on Sky Sports, has received a tax bill totalling £230,000, in part due to an embarrassing blunder by his tax advisors.
According to the FT Adviser, Lynagh received the tax bill in December 2021 as a result of an investigation which began in 2020. The bill was issued to Lynagh’s company and set out the appeal procedure to follow and the deadline for appeal.
However, the accountants failed to appeal the ruling by the deadline. Despite contesting the bill at a tribunal in December last year, the tribunal judge found that there was an “absence of any good reason for the delay”.
It means the former rugby player must now pay substantial backdated taxes. Speaking to the FT Adviser about the case, Tim Stovold – Head of Tax at Moore Kingston Smith, an accountancy firm – said “had Mr Lynagh been able to roll the dice, he might have got lucky”, but conceded that he was “denied his day in court” as a result of the accountancy’s error.
HMRC continues to target BSkyB workers
Michael Lynagh is the latest in a long line of high-profile individuals targeted by HMRC for supposedly breaching the IR35 rules.
The tax office has also investigated and billed Alan Parry and also Dave Clark for historic non-compliance, and there is an ongoing case against Gary Lineker.
It’s worth noting, however, that some TV personalities – including Adrian Chiles and Lorraine Kelly – have successfully fought cases against HMRC.
The Lynagh case also sees HMRC continue its tactic of targeting contractors associated with Sky Sports, as was the case with Parry and Clark.
Speaking to the Financial Times, Chris Leslie of Tax Networks Limited – who represented Parry in his unsuccessful appeal against a £356,000 tax bill – said that contracts between Sky Sports and its contracted pundits were similar in structure, calling it “a bit of a problem”.
As well as demonstrating the significant financial risks that contractors face in the event of non-compliance, these recent cases against BSkyB workers show the dangers of prescriptive contracts.
Latest case settled as government release IR35 report
The tribunal ruling against Lynagh followed a report – jointly published by HMRC and the government – investigating the impact of IR35 reform and its implementation in the private and voluntary sectors.
While the report claims that the majority of contractors are unaffected by the off-payroll working rules, those that have been affected are paying the price for non-compliance.
This is particularly true in the high-profile cases, which have attracted eye-watering sums; Lynagh’s tax bill of £230,000 is lower than the £281,000 that Clark was issued. Both are dwarfed by the bill issued to Alan Parry, which exceeded £350,000.