The long-awaited Court of Appeal (COA) decision about the tax status of football referees has recently been issued; see HMRC v Professional Game Match Officials Limited (PGMOL) [2021] ECWA Civ 1370.
In making their decision to ask the First-Tier Tribunal (FTT) to rehear the case, the COA decided that the initial FTT and subsequent Upper Tribunal (UT) decisions had “erred in law” when ruling that the referees should not be treated as employees of PGMOL (or subject to IR35 if providing their services to PGMOL via limited companies).

In this respect, the COA said that the FTT and UT had made errors in their considerations of the “mutuality of obligation” and “control” tests typically applied when considering employment status.

Background

PGMOL is effectively owned and controlled by the three main English football bodies (the FA, Premier League and the Football League) and provides match officials for competitive games.

It employs a number of referees on a full-time basis – generally those who referee Premier League matches and international games – and who are paid net of tax and NIC via the PAYE system. However, referees in lower league games generally provide their services in their spare time, typically alongside other full-time employments, and are treated by PGMOL as consultants, and paid without deduction of tax and NIC. It is the latter that the case centres around.

Before the start of the football season, PGMOL approaches chosen referees and appoints to its national group for that season those selected referees who sign a Code of Conduct.

There are no formal employment contracts between the parties, and referees are neither guaranteed to be offered appointments, nor obliged to accept those that may be offered.

On the pitch referees have total control of games, subject to FA regulations. However, off the field, PGMOL applies rules about match day procedures and requires referees to abide by its fitness and training protocols.

Referees are paid a match fee and expenses by PGMOL for the games that they officiate.

HMRC challenged the referees’ employment status and issued to PGMOL Regulation 80 determinations for PAYE and Section 8 decisions for employer’s NIC. PGMOL appealed.

Tribunal

The FTT concluded that;

• The annual agreements between the PGMOL and individual referees did not constitute contracts of employment;
• There was insufficient mutuality of obligation and control in the arrangements to create an employment contract position.

The UT supported the FTT conclusion, and so HMRC appealed the matter to the COA.

Court of Appeal

The COA allowed HMRC’s appeal.

On mutuality of obligation, the COA said that where referees are engaged by individual contract for each match, whether there is sufficient mutuality of obligation for the referees to be employees for tax purposes should be considered by reference to the contract for that match rather than any wider arrangements between the parties.

In other words, even though the annual agreement between the PGMOL and individual referees did not constitute an employment contract, and there was no obligation on the PGMOL to offer work or for the referees to accept it, this did not mean that once the parties had reached agreement regarding the refereeing of a particular match, that single match contract could not of itself be a contract of employment.

On control, the COA noted that there were many features of the relationship between the parties which might constitute a framework of control, for example PGMOL’s power to promote and demote referees, specification of match day procedures, agreement to sign and abide by a Code of Conduct, and fitness protocols.

Although stopping short of giving a decision, in passing the case back to the FTT for reconsideration the COA appears to have given quite a strong steer that it would expect the FTT to decide that the referees should correctly be treated as employees.

Wider implications

Assuming that the FTT follow the COA’s steer, the PGMOL could be faced with a tax bill in excess of £500K.

However, the decision could have implications far beyond the world of football, as many “occasional” contract arrangements rely on there being no obligation to offer or accept ongoing work as an indicator of a contract for services rather than a contract of service (i.e. employment/IR35).

Likewise, other self-employment arrangements rely at least partly on there being no direct control over the services being provided; in this case, once the referee is on the pitch, he is in control.

The COA decision however suggests that even in such circumstances, the control aspect of employment status might be satisfied by the existence of such things as guidelines, training protocols and disciplinary procedures.