Tribunal denies HMRC £583k in referee appeal
The First Tier Tribunal (FTT) has upheld an appeal against HMRC, ruling that it should have treated a group of professional football referees as contractors and not as employees, reports James Bunney
14 Sep 2018
The case concerned a group of 60 professional football referees who were pursued by HMRC over the matter of backdated national insurance contributions (NICs) and PAYE tax required for working in their professional capacity over three football seasons between 2013 and 2016. [Professional Game Match Officials Limited and the Commissioners for Her Majesty’s Revenue & Customs  UKFTT 528, TC06698].
The amount outstanding as determined by HMRC was income tax of £172,849.18 and NICs of £123,990.30 in respect of the tax year 2014-15, and income tax of £162,661.84 and NICs of £124,372.75 in respect of the tax year 2015-16, a total of £583,874.07 discounting interest.
HMRC had determined that the referees should be classed as employees of Professional Game Match Officials Limited (PGMOL).
PGMOL is a company limited by guarantee, whose three members are The Football Association Limited, The Football Association Premier League Limited and the English Football League. It employs referees under full-time written employment contracts for some events, but the referees in this case undertook refereeing in their spare time in addition to full-time employment.
The appellants demonstrated successfully that, due to the lack of two core features of employment, the referees were classed as self-employed contractors. The two factors they invoked were mutuality of obligation (MOO) and control.
MOO is legally defined as ‘some level of obligation to perform work personally and pay remuneration’, considered an irreducible minimum of a contract of service. Control is a ‘sufficient framework of control’ in respect of an ‘ultimate authority’.
Judge Sarah 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’. She cited Sharpe v The Bishop of Worcester  EWCA Civ 399, a case of unfair dismissal in which a clergyman was determined not be employed because his duties could not be adequately described.
PGMOL v HMRC is the latest case in which HMRC has failed to adequately incorporate MOO into its assessment of IR35 cases. In case law, MOO is one of three key elements in determining employment status, but HMRC purposely omitted this element from its Check Employment Status for Tax (CEST) tool on the assumption that, in every contractor arrangement, MOO is present.
Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), said: ‘HMRC lost this case because it misconstrued the concept of mutuality of obligation which it seems to assume is present in every engagement. The tribunal disagreed.
‘That, combined with a lack of control by PGMOL over the referees, clearly indicated that this was not an employee-employer engagement. Unfortunately, we have again had to rely on the courts to make this determination.
‘This comes on the back of HMRC having lost three out of four cases in the tax tribunal that also turned on a misunderstanding of key employment indicators.
‘What this highlights is that the rules in this area are very complex, and if HMRC is struggling to determine who is employed and who is self-employed, then so too is everyone else.
‘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 is not self-employed and would mean that individuals would not have to rely on the courts to get a resolution.’
Report by James Bunney