Former professional rugby player, Michael Lynagh is facing a £230,000 tax bill for breach of IR35 rules after having his request for an appeal against HM Revenue and Customs rejected.
Lynagh, who is a managing director for Dow Jones, also occasionally works as a sports commentator for sports stations, predominantly Sky.
Through his company MPTL limited, Lynagh has been in dispute with HMRC since 2020 over a tax bill of approximately £230,000 in income tax and national insurance contributions for his work as a sports commentator.
The bill was subject to a review by HMRC which sent a review conclusion letter to Lynagh’s company and its then tax accountants in December 2021.
The letter upheld the application of IR35 and set out MPTL’s right to appeal.
HMRC subsequently wrote to Lynagh’s tax accountants noting that if MPTL entered into a settlement agreement it might be eligible for overpayment and dividend reliefs.
However, MPTL disagreed with the outcome of the review and sought to have the issue heard by a first tier tribunal.
But, Lynagh’s tax accountants did not file a notice of appeal with the tribunal before the deadline HMRC had outlined.
As a result of this, a tribunal hearing which took place earlier this month on December 7 concluded with the tribunal judge ruling that Lynagh was not entitled to appeal the HMRC tax bill.
This was because in the judge's view there was “absence of any good reason for the delay” in filing the initial appeal.
Lynagh’s company MPTL argued that the delay was caused by mistakes by its then tax accountants, which informed HMRC that they delay was due to its enquiry officer being on sick leave.
Commenting on the case, Tim Stovold, head of tax at Moore Kingston Smith said that Lynagh was “denied his day in court” because the deadline to appeal against HMRC’s assessment of £230,000 was “missed by his advisers”.
“The tribunal was not persuaded to relax the time limit by the argument that HMRC would have a ‘windfall’ by being able to recover the disputed amount of tax without having to defend an appeal in the tribunal.”
Stovold noted that the tribunal judge commented at the time that Lynagh’s prospects of winning the IR35 argument ‘were not good’ but Stovold added: “there have already been several unexpected IR35 decisions for TV presenters, and had Mr Lynagh been able to roll the dice, he might have got lucky.”
In recent times there has been a slew of high profile IR35 tax cases.
Back in July, Sky Sports presenter Alan Parry lost his appeal against HMRC leaving him with a £356,000 tax bill.
Last year, former Sky Sports TV presenter Dave Clark lost his IR35 appeal against HMRC, which saw him handed a £281,000 tax bill.
TV sports host Gary Lineker's £4.9mn tax battle continues, while broadcaster Lorraine Kelly won her case over a £1.2mn bill. As did Radio 5 Live presenter Adrian Chiles, who was facing a £1.7mn bill.
Commenting on Lynagh’s case, a spokesperson for HMRC told FTAdviser: “These rules are in place to ensure that people who work like employees, but through their own limited company, are taxed like employees, creating a level playing field with other workers.”
jane.matthews@ft.com
