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Referees lose latest round in dispute with HMRC in off-payroll case

In the long-running employment taxes saga of Professional Game Match Officials Limited (PGMOL) v HMRC, HMRC recently scored an equaliser in the Court of Appeal. Whilst the final whistle is still to be blown, HMRC will consider this outcome a small victory.


The Court of Appeal has ruled in favour of HMRC that the lower courts in this case (i.e. the First Tier Tribunal (FTT) and Upper Tribunal (UT)) erred in their judgement when considering whether 60 part-time referees who were engaged by PGMOL to officiate five football matches were employees of PGMOL for tax purposes.

The case focusses on the interpretation of mutuality of obligation which has been looked at in a number of cases involving media celebrities over the last few years. Whilst there are a number of tests that are used to determine employment status, where there is an obligation to provide work, together with the obligation to carry out that work, there is evidence of an employment relationship for tax purposes.

In 2018 the FTT determined that the referees weren’t employees of PGMOL for tax purposes as the overarching contract each referee had with PGMOL was not a contract of employment and there was no mutuality of obligation outside the individual engagements where a referee actually officiated a match. In other words, the FTT concluded that either side could pull out of the engagement before a game, without any breach of contract or any sanction.

In 2020 HMRC appealed this decision to the UT which upheld the FTT’s decision finding that there had been no error of law. As a result of this HMRC put forward the appeal to the Court of Appeal.

Court of Appeal judgement

The Court of Appeal found that the FTT had erred in law in deciding that the ability of either side to pull out before a game removed a necessary mutuality of obligation. After considering the facts of the case itself, the Court of Appeal took a different view of the relationship between PGMOL and the referees and determined that the ability of the referees to pull out of officiating games on a game by game basis without breaching the overarching contract did not remove mutual obligations associated with the overarching contract i.e. a requirement for PGMOL to provide games to officiate and a requirement for the referees to officiate these games was still present in the absence of the overarching contract being terminated by one side or the other. The decision is consistent with previous, similar cases heard by the Court of Appeal.

The Court also determined that the FTT had erred in law in respect of the question of PGMOL’s control of the referees (another key test in the determination of employment status for tax purposes). The Court found that coaching and assessment systems required by PGMOL should be relevant when considering the question of control (the FTT had deemed them irrelevant).

As a result of the judgment, the Court of Appeal has allowed HMRC’s appeal and has directed the matter back to the FTT to reconsider the facts and reassess its judgement. We await to hear what their updated findings will be.

Wider implications

With the new off-payroll rules still in their infancy for the private sector, this case is a reminder that all employment status decisions (in the sports industry and wider) should be taken after considering all elements of status in the round. It is also a reminder to HMRC that their CEST (Check employment Status for Tax) tool needs refining to include more questions about the nature of obligations on both sides. Currently CEST does not ask these questions as it assumes that there is already an obligation on both parties to offer and accept work as a preconceived condition of using CEST. In the absence of CEST being able to make judgements in the round, HMRC will need to take into account that the tool doesn’t accurately reflect the Court of Appeal’s binding judgement in this case and there will continue to be differing interpretations of CEST’s conclusions.

How PKF Francis Clark can help

Our employment taxes team are experienced in advising on the recently introduced off-payroll working rules for the private sector including reviewing employment status and the conclusions made by HMRC’s CEST tool. Our professional sports team also have experience of advising national governing bodies, clubs, leagues, players and officials. Please give us a call if you’d like to discuss the case or the issues raised further

FEATURING: Steve Ashworth
Before joining the Bristol office of PKF Francis Clark in July 2019, Steve started his career at HMRC over 30 years ago and then spent… read more
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