Football Referee Case

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HMRC has suffered another humiliating employment tribunal defeat in relation to IR35 after the presiding judge, Judge Sarah Falk, found that it should have treated professional football referees as contracting professionals and not employees.

HMRC has argued that a group of 60 referees, members of the Professional Game Match Officials Ltd (PGMOL), should pay backdated National Insurance Contributions and PAYE tax for officiating over three professional football seasons between 2013 and 2016. They were, according to HMRC, improperly classified as independent contracting professionals and were in fact employees of the PGMOL.

However, counsel for the PGMOL were able to successfully demonstrate to the tribunal that the referees should indeed have been classified as self-employed contractors as they lacked two core features of employment: mutuality of obligation and control. Judge Falk agreed, concluding that: “individual appointments to matches were engagements to perform the task of officiating at the match in question for a fee and not contracts of service”.

The case, PGMOL v HMRC, is yet another example of HMRC’s failure to grasp the significance of Mutuality of Obligation (MoO), which it simply presumes to be present in all engagements. Due to this presumption, HMRC’s online IR35 assessments tool, Check Employment Status for Tax (CEST) does not even test for MoO.

Yet, contractor tax experts pointed out in April this year that, while an element of MoO exists wherever there is a contract in place, it can be absent during the agreement itself so that the engager is under no obligation to continue offering work and the contractor is similarly under no obligation to continue accepting work. That arrangement is a key indicator of genuine self-employment.

The point was not lost on Andy Chamberlain, Deputy Director of Policy at the Association of Independent Professionals and the Self Employed (IPSE). The absence of MoO during the agreement with the referees, he noted, combined with the absence of control by PGMOL over them, were seen by the tribunal as clear evidence that an employee-employer engagement did not exist.

HMRC, Chamberlain emphasised, has now lost three out of four tax tribunal cases due to its misunderstanding of key employment characteristics. The rules, he said, were exceedingly complex, leaving everyone to struggle over who was and who wasn’t genuinely self-employed. He proposed a remedy: “The best way to address this legal uncertainty is to write into a law a positive definition of self-employment.”

“This would send a clear signal about who is and who isn’t self-employed and would mean that individuals wouldn’t have to rely on the courts to get a resolution.”


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