Case remitted back to a First Tier Tribunal for a decision to be remade, with over half a million in tax liability at stake
The Supreme Court has issued its ruling in HMRC v Professional Game Match Officials Ltd (PGMOL), more than a year on from the 2023 hearing, dismissing the refereeing body’s appeal and sending the case back to a First Tier Tribunal (FTT) for the original decision to be remade.
First heard in 2018, the PGMOL case – which carries a liability of around £584,000 – centres on the engagement of sole traders rather than limited company contractors, and so is a crucial litmus test of the application of employment status among the wider self-employed workforce.
The ruling, issued on Monday 16th September, further extends a long-running saga which has already been heard at the FTT, the Upper Tier (UTT) of the tax chamber and at the Court of Appeal before reaching the Supreme Court.
About PGMOL
PGMOL oversees the provision of referees as match officials for professional football matches in England. It engages some individuals as permanent, full-time employees and others who “referee in their spare time and who usually have other full-time employment or occupations”.
The tax treatment of the fees paid to this latter group – in particular, during the 2014/15 and 2015/16 tax years – has been the subject of this protracted case.
HMRC believed these fees should have been subject to income tax and national insurance deductions, though PGMOL disagreed, bringing the case to the First Tier Tribunal in 2018.
The case history
This case has focussed on the contracts held between PGMOL and its referees, and the overall issue is “whether the contracts formed each time that an offer of a match appointment was accepted by a referee, were contracts of employment” rather than self-employment.
At the FTT, it was found that individual match contracts “were not contracts of employment, on the grounds that, first, the mutual obligations were insufficient… and second, PGMOL had insufficient control over the referees under the individual match contracts”.
HMRC appealed, though the UTT upheld the original decision. At the Court of Appeal, the judges ruled in HMRC’s favour in relation to the individual contracts, but that the “overarching contracts were not to be treated as contracts of employment”.
It also remitted the case to the FTT to reach a decision on whether the individual contracts should be treated as contracts of employment. However, PGMOL appealed against this, bringing the case to the Supreme Court.
At the highest level of the legal system, the judges ruled that the individual match contracts contained “a sufficient framework of control exercisable by PGMOL to satisfy the element of control necessary for a contract of employment”.
The Supreme Court remitted the case to the FTT for its decision, to be considered “on the basis of its original findings of fact” and in line with the guidance established by the Court of Appeal in Atholl House, and “the nature of the mutual obligations and the degree of control exercisable by PGMOL”.
“Disappointing” decision adds to case law confusion
Responding to the development, Rebecca Seeley-Harris – a tax and self-employment consultant – said that the case “basically comes down to the contractual obligations” between PGMOL and the ‘freelance’ referees it engaged during the tax years in question.
However, following such a lengthy process, Seeley-Harris said it was “disappointing” the case would be reheard again. Speaking to CityAM, she also questioned how “ordinary businesses are supposed to interpret this case law” when making status determinations about the workers they engage.
Speaking to FTAdviser, Dave Chaplin – CEO of IR35 Shield – said the case was significant because the ruling “has now ratified the principles from the April 2022 decision by the Court of Appeal in Atholl House”.
“Regrettably for PGMOL, their case now faces a fifth hearing, having been remitted back to the First Tier tax tribunal, to consider matters on engagements that took place ten years ago”, Chaplin concluded.
Another bonkers waste of money. A self employed person can earn money based on a contract. Gets paid the contracted amount. It is then their responsibility to declare the money earned on their Self Assessment Tax return which will calculate their Tax and NI liabilities along with all their other income streams including any PAYE full time employment. What on earth are HMRC doing here for £0.5 million??
So the referees were engaged on a ad hoc basis for matches as and when, and expected to use their expertise to perform the service to an acceptable professional standard for any individual matches they were engaged to referee? Surely that is broadly the same parameters for vast swathes of self employed folk in this country? Is the real game plan here for HMRC to push back the numbers of folk working on a self employed basis in the UK? Unless that is the case, this case seems rather pointless (apart from the to-be-expected) bullying attitude of HMRC.