HMRC has lost another employment status case at the First-tier Tax Tribunal, this time involving football officials.
The Revenue had raised tax and NIC assessments on the Professional Game Match Officials Ltd (PGMOL) totalling nearly £584K for the two years ended 5th April 2016, on the basis that they considered football referees to be employed.
The PGMOL oversees the management and administration of refereeing in professional football and provides referees and match officials for games in the most significant football competitions such as the Premier League, FA Cup and the English Football League (Championship and Leagues 1 and 2). It has three members who fund the company; the Football Association (FA), the FA Premier League (Premier League) and the Football League, now referred to as the English Football League (EFL).
The FA is the governing body for English football, including all refs in England, and classifies them by reference to a number of different levels, ranging from International, and Level 1 (National List) to Level 9 (trainee referees). The PGMOL’s role relates primarily to referees at Level 1 and their appointments to matches.
A number of refs are employed under full-time contracts by the PGMOL and are referred to as ‘Select Group’ referees. These officials will primarily take charge of Premier League matches. Select Group refs are expected to do everything the PGMOL asks, including following training programmes, attending all meetings, ensuring that pre-match preparation is suitable, being available for appointments and even cancelling holidays.
This appeal concerned refs who refereed in their spare time alongside other full-time employments and who primarily officiated matches in the EFL and FA Cup. Their role was described as a hobby, albeit a very serious one. Refereeing is fitted in around other paid work, and it does not pay the bills. These refs are paid modest match fees and expenses by the home club, and not via the FA. In contrast to Select Group referees, National Group referees are, for example, not obliged to follow a particular training programme or attend training meetings and they have no obligation to accept match appointments.
Upon invitation to join the referees list, a ref is issued with a Code of Practice that states:
“you are not an employee of PGMOL and will be treated as being self-employed.”
Under ‘Appointments’ it is stated that these will be made by PGMOL, and that there is:
“no guarantee that Match Officials on the List will be offered any appointments to matches and Match Officials are not obliged to accept any appointments to matches offered to them.”
A number of points are listed under ‘Expectations’, all introduced by the words “Match Officials shall be expected to….”:
The document also refers to “continuous monitoring” of performance with “individual appraisals being made when appropriate”.
Also mentioned is the training programme and coaching system stating that referees:
“will be required to attend meetings arranged by coaches at specific times throughout the season.”
Compliance with this Code is a condition of being either an employee or a “self-employed contractor” and that bribery or corruption could result in dismissal of employees for gross misconduct or, for self-employed match participants, removal from the list.
Hospitality or gifts in excess of £50 in value must be recorded on the gift register without delay, and anything in excess of £100 requires prior approval by the General Manager.
Match and training kit for National Group refs is provided by PGMOL, together with suits (to be worn to and from matches), ties with the PGMOL logo and overcoats. Assistant referees and Fourth Officials receive similar kit, so as to create the appearance of a professional team. Match kit is provided in four different colours with the ref choosing which set to wear on the day. However, National Group refs must supply their own boots and trainers, watches, cards and whistles. In practice, they also require their own computer, and many pay for gym subscriptions and heart monitors that are used to provide data to PGMOL’s sports scientists, as well as for other items such as Sky TV subscriptions, nutritional supplements and sports massages.
PGMOL loans the use of communication equipment to allow match officials to communicate.
Private medical insurance is offered to National Group refs by PGMOL, and in practice generally reimbursed the excess on claims. Additionally, PGMOL offers a heart screening programme and psychological support.
Match fees and allowances are set by PGMOL. Payment of fees and expenses is not dependent on the production of an invoice by the ref. From 2015/16 onwards, it has been an automated process that follows from the submission of a post-match report by the ref and the entry of details of expenses via software called the Match Official Administration System (MOAS). Training attendance fees and expenses are paid in the same way. Prior to this, match expense claims for EFL matches were submitted directly to the home club using an ‘expenses claim’ form.
Referees who do not attend games for whatever reason do not get paid their match fee. Furthermore, the PGMOL may also cancel an appointment of one ref and replace him with another. In both these instances though, the substitution of an alternative ref would be a matter for PGMOL, not the referee.
HMRC argued that the expectation of being offered work, resulting from the practice over a period of time, can constitute a legal obligation to provide some work or perform work provided. In this case, there was sufficient MOO between matches, but in any event the refs were in practice regularly offered, and regularly accepted, work throughout the season. The requirement in the Code of Practice to be readily and regularly available for appointment to matches was in practice more than an expectation.
The Tribunal did not agree. During the actual engagement, there would be some level of mutuality, namely for the ref to officiate as contemplated (unless he informed PGMOL that he could not) and for PGMOL to make payment for the work actually done. However, the Tribunal’s view was the discrete contract started when an individual match appointment was offered and accepted, and that even after acceptance the ref had the ability to withdraw from the engagement before he arrived at the ground, and that PGMOL was also able to cancel the appointments.
According to HMRC, there was a sufficient degree of control exercised over referees. The practical realities of the relevant industry had to be taken into account, and all that was needed was a sufficient framework of control. The level of control exercised during matches was the same as for the Select Group, who were accepted as being employed. There was continual monitoring and assessment via the assessor and coaching system, and assessments fed into remuneration. The assessment system was no different to regular employee appraisals. Once a referee had indicated his availability on a particular date he had no ability to choose which match to officiate in. That was entirely at the discretion of PGMOL. PGMOL also had the ultimate right to sanction referees by suspending them from officiating, and imposed controls on off-pitch activity via the Code of Practice and Protocols.
Counsel for PGMOL however, argued that the control that existed was regulatory control rather than control resting with PGMOL, and that during engagements referees, like clergy, were beyond control.
The Tribunal agreed that the pre-season documents, including the fitness protocol, the Match Day Procedures document, and the Code of Conduct, imposed some obligations on referees which gave PGMOL elements of control. However, they were not persuaded that the assessment and coaching systems themselves provided further elements of control in respect of individual match appointments. This is advisory rather than controlling in nature. Similarly, the coaching system is very much a personal, one-to-one arrangement designed to support referees and assist them to develop to the best of their ability. A coach present at a match might offer advice at half time as well as before or after, but that is simply advice and not an indicator of control.
Although some referees suggested in HMRC’s interviews that they had no control over where they were sent for matches, Tribunal did not think that that was correct in a legal sense. They had the right not only to express geographical preferences on MOAS but also to refuse any particular appointment once it was offered, or even to back out later. This was not the sort of arrangement under which PGMOL could direct the referees about where to go or when to go there, or indeed what task to perform when they got there. In each case, the refs needed to agree to take on a particular task at a specified location, date and time. Referees clearly had to travel to the location to carry out the appointment, but that was determined by the nature of the task they had agreed to take on rather than by any form of control in an employment sense.
Whilst the Tribunal would not go as far as comparing referees to clergy, it was relevant to consider the nature of the role.
The Laws of the Game make it clear that the referee’s decision is final, and there was no suggestion that PGMOL could, for example, remove the ref at half time and replace him with another, or do anything more than offer coaching advice.
Overall, the Tribunal were not persuaded that PGMOL had a sufficient degree of control during the individual engagements to satisfy the test of an employment relationship. It did have a level of control outside match appointments as a consequence of the overarching contract. Although some of the obligations imposed by that contract applied to matches, there was no mechanism enabling PGMOL to exercise the corresponding rights during an engagement. In reality, the only sanction PGMOL could impose for failure to adhere to these commitments was not to offer further match appointments, and to suspend or remove the referee from the National Group list. If an issue emerged between a match appointment being made and the date of the match, then the most PGMOL could do in respect of that appointment was to cancel it. That is not an exercise of control during an engagement, but rather it is a termination of that particular contract.
The fact that there was some element of control did not automatically mean there was a contract of service (employment), as HMRC are so keen to argue.
There were some pointers towards employment such as:
These however, were vastly outweighed by the fact that there was insufficient MOO and control, and therefore it was ruled that the refs were self-employed.
Yet another lesson for HMRC in MOO and control but don’t expect them to be swayed by common sense and logical argument any time soon.
The full judgment can be found here: PGMOL v HMRC.