HMRC has lost a long-running legal battle against the UK's football refereeing body, the Professional Game Match Officials Limited (PGMOL), over the employment status of 60 referees. The tax authority had issued a £584,000 tax bill, but the First Tier Tribunal (FTT) upheld that the referees were self-employed and not employees.
Background of the Case
The dispute began when HMRC claimed that PGMOL owed tax for the referees, alleging they were employees and should have paid tax and National Insurance contributions for the tax years 2014-15 and 2015-16. PGMOL provides referees and trains them to officiate at the highest level of professional football, including the FA Cup and the Premier League. After being hit with the tax bill in 2018, PGMOL appealed to the FTT, which backed the body.
Legal Proceedings
The case progressed through the Upper Tribunal and the Court of Appeal before reaching the Supreme Court. The top UK court was asked whether the relationship between PGMOL and part-time referees could be classed as an employment relationship, which would obligate PGMOL to deduct income tax and national insurance from payments made to referees. However, the Supreme Court dismissed the appeal and sent the case back to the FTT.
FTT Ruling
On Friday, the FTT held that the contracts were not contracts of employment because there was no ongoing legal obligation on PGMOL to offer work or on referees to accept it. Referees retained the right to withdraw from matches even after accepting work. The judges stated this was “fundamentally inconsistent with the structure of employment” and that overall it was “not a finely balanced case.” They added, “What emerges instead is the picture of skilled professionals participating voluntarily in a regulated framework.”
Reactions
Dave Chaplin, chief executive of IR35 tax compliance firm IR35 Shield, called this “a decisive defeat for HMRC” and said the tribunal “has dismantled many of HMRC’s long-held assumptions about how status case law should be applied.” He noted, “Most tellingly, the tribunal did not see this as a finely balanced case and said the relationships with referees lacked the defining hallmarks of employment.”
Tim Stovold, head of tax at Moore Kingston Smith, commented, “The tribunal has taken the view that, if it quacks like a duck, it is a duck.” He added that even after the eight-year-long legal battle through the court system from the first tier to the highest court, there is “still the risk that HMRC could appeal,” and employment status “remains an area of great uncertainty” in the tax system.
Next Steps
HMRC has the right to appeal if it wishes. A spokesperson said the tax authority is “carefully considering our next steps.”
