The Supreme Court has rejected an appeal by the Professional Game Match Officials Limited (PGMOL) challenging a £584,000 tax bill imposed by HMRC about the employment status of 60 referees. Although a final judgement has not been made, the Supreme Court has remitted the case to the First-tier tribunal to reconsider its decision.
The case history
The Supreme Court has failed to give a final judgment in the appeal from the football refereeing body, Professional Game Match Officials Limited (PGMOL), about the employment status of 60 referees and a £584,000 tax bill.
The case involves determining whether football referees, engaged as sole traders, are employees for tax purposes. This would require PGMOL to deduct employment taxes, including National Insurance contributions. PGMOL, which supplies officials for elite football competitions, including the Championship League and the FA Cup, had contested that the referees were not employees but independent contractors.
The PGMOL case centres on the engagement and tax treatment of the fees paid to a group of referees, particularly during the 2014/15 and 2015/16 tax years. HMRC believed these fees should have been subject to income tax and National Insurance Deductions, though PGMOL disagreed, bringing the case to the First Tier Tribunal in 2018.
The First-tier tribunal ruled in favour of PGMOL, asserting that the right to cancel shifts meant there was no mutuality of obligation and insufficient control over the work of the referees.
HMRC then appealed to the Upper Tribunal, which agreed with the original decision (although disagreed on the control element) and dismissed the appeal.
This was then challenged in the Court of Appeal in 2021. The Court of Appeal sided with HMRC, finding sufficient mutuality of obligation and control in respect of the contracts between the referees and PGMOL that formed in respect of each individual match.
The case has been progressing through the UK’s legal system since 2018, and the ruling (available to view here), issued on the 16th September 2024, further extends a long-running saga. The case has been sent back to square one for a fifth hearing at the First-tier tax tribunal to rule on the tax status of engagements entered into over ten years ago.
Overview of the case and case facts
The appeal to the Supreme Court focussed on the correct application of the Ready Mixed Concrete (RMC) test, which is the accepted case law on how to consider employment status matters.
PGMOL provides referees for major football matches in England. To provide these services, PGMOL engages a pool of referees who officiate matches in their spare time – most of whom do it alongside their full-time employment. They also engage a set of full-time references under contracts of employment, and these referees are primarily for Premier League matches.
The case focused on the pool of part-time referees, which PGMOL treated as self-employed, and fees paid to them were not treated as employment income—HMRC disagreed with this decision.
To be added to the pool, referees must attend an introductory seminar and pass a fitness test. They were also provided with a code of conduct and match-day procedure documents. Subject to meeting these requirements, referees were added to the pool on an annual basis.
Similarly to systems used by other sports clubs and football clubs, PGMOL used an event management system to offer matches to referees. A referee was ‘booked’ when they accepted a match – although the referee and PGMOL had the ability to cancel.
The Supreme Court had to determine whether the following two elements of the test for an employment relationship were met:
- Mutuality of obligation – In exchange for payment, did the referees have to personally perform the work?
- Control – Was a ‘sufficient framework of control’ exercised by PGMOL over the referees, which showed that the relationship was one of employment.
The final element of the test is whether the whole relationship between the parties and the provisions of the contract are consistent with a contract of employment. The first-tier tribunal will determine this.
What are the key aspects of the ruling?
The hearing focused on the case law concepts of “sufficiency” of mutuality of obligation and extent (or “degree”) of control and how those factors impact employment status decisions where there is no guaranteed offer and acceptance of work, similar to gig working.
Key parts of the ruling include:
- The right to terminate is irrelevant at the first stage of the Ready Mixed Concrete test of determining whether there exists sufficient mutuality of obligation required for a contract of employment. The first stage requires an obligation to pay if work is done. Payment for services and some elements of control do not determine by themselves whether the engagement is one of employment.
- The natureand extent of the mutual obligations are relevant at the third stage of Ready Mixed Concrete to determine whether the contract is one of employment. A client does not need control over every aspect of the worker’s duties for a relationship to be deemed employment; sufficient contractual control is enough.
Dave Chaplin, CEO of tax compliance firm IR35 Shield, said the ruling shows a “full multi-factorial assessment” needs to be made, considering all relevant factors” needs to be done when a company is paying someone for work.
He added: “Regrettably for PGMOL, their case now faces a fifth hearing, having been remitted back to the First Tier Tribunal, to consider tax matters on engagements that took place 10 years ago.”
Top 10 umbrella companies
Are you looking for an umbrella company that you can trust? We have collated a list of our top 10 umbrella companies, and they’re all accredited by either the FCSA or Professional Passport. We recommend you check them out because they take compliance extremely seriously, and some have special offers at the moment!
