The Supreme Court has dismissed an appeal from the football refereeing body regarding the employment status of 60 referees after the body was hit a £584,000 tax bill.
HMRC hit Professional Game Match Officials Limited (PGMOL) with the tax bill after it determined it should have paid taxation and National Insurance payments for the tax years 2014-15 and 2015-16.
PGMOL provides referees and other match officials for the most significant football competitions. The body is responsible for training and providing referees primarily at the highest level, including those who officiate matches in the Championship League and the FA Cup.
This case has been going through the legal progress since 2018, moving all the way up to the highest court in the UK.
Following HMRC’s bill, PGMOL appealed to the First-tier Tribunal (FTT) against the decision, which sided with the body.
The FTT held that the contracts were not contracts of employment because: (i) there was insufficient mutuality of obligations between PGMOL and the referees; and (ii) PGMOL had insufficient control over the referees under the contracts.
The tax agency then appealed this ruling to the Upper Tribunal, which upheld the FTT’s decision.
The case went to the Court of Appeal in 2021, which allowed HMRC’s appeal and remitted it to the FTT to re-consider certain issues.
In the meantime, the PGMOL appealed to the Supreme Court on the issues the Court of Appeal allowed.
The highest court in the UK had to look at whether the relationship between a company responsible for providing football referees to the Football League and part-time referees is an employment relationship that triggers an obligation on the company to deduct Income Tax and National Insurance from the payments it makes to the referees.
Today, 15 months after the Supreme Court heard the case, it ruled that the referees’ body appeal should be dismissed and the case should proceed back to the FTT.
Commenting on the decision, Seb Maley, CEO of Qdos said “this is a landmark case that puts the issue of employment status firmly on the radar of all businesses.”
“The fact that it will be reheard at another First Tier Tribunal shows how complex employment status can be,” he noted.
Dave Chaplin, CEO of IR35 Shield, added: “The Supreme Court has now ratified the principles from the April 2022 decision by the Court of Appeal in Atholl House, bringing firms and taxpayers more certainty when making tax status decisions around IR35 and Off-payroll.
“Regrettably for PGMOL, their case now faces a fifth hearing, having been remitted back to the First-tier tax tribunal, to consider tax matters on engagements that took place ten years ago,” he added.
While Frances Lewis, consultant at Osborne Clarke, highlighted that this decision “will impact assessment of employment status for tax purposes for contractors and some gig platform workers.
She explained that “the decision confirms that, for tax purposes, sufficient mutuality of obligation can exist during a number of separate contracts even where either party can cancel without penalty, and that sufficient control can exist even where the end user has no contractual right to intervene in every aspect of the performance of the work by the worker.”
“This means that any element of control, such as a bit of training or comment on how a service should have been performed or could have been improved, could be enough to pull the workers into PAYE and NICs – the decision states that control may take many forms and is not confirmed to the right to give direct instructions,” she added.
HMRC spokesperson said: “We welcome this decision, which confirms our position on employment status law and maintains clarity for taxpayers, employers and agents.”