Employment Status & IR35 expert Re Legal Consulting Ltd
Columnist
Share this content
Whistle and red card

Employment status: HMRC gets a red card

by

In a case against HMRC, the upper tribunal found individual football referees to be self-employed. The case shines a harsh light on HMRC’s view of mutuality of obligation and has implications for the CEST tool. 

15th May 2020
Employment Status & IR35 expert Re Legal Consulting Ltd
Columnist
Share this content

The case (UKUT 0147) concerned football referees engaged by Professional Game Match Officials Limited (PGMOL) and whether they were self-employed individuals when officiating at league matches, or employees of PGMOL. The appeal relates only to the National Group of referees who undertake their match duties in their spare time. 

The referees won the first round at the FTT. The decision has again gone in favour of the match referees at the UT, making the decision a binding precedent.

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:


Content lock down, tick icon

View all AccountingWEB content


Content lock down, tick icon

Comment on articles


Content lock down, tick icon

Watch our digital shows and more

Access content now

Already have an account?

Replies (18)

Please login or register to join the discussion.

avatar
By johnjenkins
18th May 2020 10:24

I have always said that if the "contract for services" is correctly worded and participants stick to the contract, then HMRC don't have a leg to stand on. Don't forget, as much as they would like to, HMRC cannot control employment status. It is a commercial decision and the sooner HMRC give up on this ludicrous crusade the better. HMRC should stick to what it should be doing, investigating and collecting, not meddling.

Thanks (6)
Rebecca Seeley Harris
By Rebecca Seeley Harris
18th May 2020 10:40

Thanks John, I would just add to that, that the contract for services needs to be a true reflection of the working practices. It's no good having a well drafted contract unless the reality shows self-employment.

Thanks (1)
avatar
By tedbuck
18th May 2020 10:43

Typical case of HMRC overreaching itself on what it thought was low hanging fruit whilst ignoring the bigger cases because they are too much effort.
Jim Harra is no better than his precursors and so far that isn't good.
The real problem, of course, is lack of skilled staff as HMRC seemingly don't train them preferring to rely on computers to work the system.
The only trouble with that is that errors made on computers disappear into the mass of numbers and can therefore be manipulated by those less honest than the rest and of course lack of understanding of how the programs work doesn't help.
Then, of course there are all the Tax Laws - who on earth can be expected to grasp several thousands of pages of largely incomprehensible legislation? I heard a while back that HMRC had to engage a tax training company to explain how some new tax law worked. Says it all doesn't it?

Thanks (1)
By tonyaustin
18th May 2020 10:44

Mutuality of obligation has been used as a factor to decide whether or not there is employment in a number of cases. If HMRC were correct in their interpretation, it would not be a factor at all because if there is no contractual relationship, there is no source of income and no case to take to court. There must therefore be a difference in terms of MOO between an employment contract and a "self-employed" contract.

Thanks (1)
avatar
By flightdeck
18th May 2020 10:48

Is this a good use of HMRC's time [our money]? This example just sounds like a lot of expensive lawyers getting their rocks off on seeing who can be cleverest with semantics and tautology. Surely there are better things for HMRC to spend money on? Like having a look at large farms and their workers situation.

Thanks (3)
Replying to flightdeck:
avatar
By dmmarler
18th May 2020 12:15

No, it is not a good use of our money. Our new Chancellor should get rid of the root of the problem when he revises all the taxes (to start paying back our Covid borrowings). NI should be scrapped as a separate tax on both the employer and the employee. Employers should be encouraged to take on people, not be penalised for doing so. People should just pay tax (not tax and NI) on their earnings (from all sources) so taxation is equalised. The government should simplify all taxes so the people (including MPs) can understand them. By simplifying taxation the need for expensive staff at HMRC with office space, computer systems, gold-plated pensions, etc., should be dramatically reduced. Then the UK economy can concentrate on making money, not paying consultants (accountants, lawyers, etc.) to sort things out all the time.

Thanks (1)
Replying to dmmarler:
avatar
By flightdeck
18th May 2020 14:11

A voice of reason! I agree with you (but I'm afraid that's just qualified you out of holding public office!).

Thanks (0)
Replying to dmmarler:
avatar
By kenatnam
19th May 2020 09:32

Unfortunately the Government won't simplify taxation for the simple reason that if the ordinary man in the street could see the exact percentage of tax he was paying there would be a revolt! At the moment, by smoke & mirrors most people think they are paying 20% tax.
I agree that it doesn't make any sense in its current form and it is well out of date but I wouldn't bet on the system being made any clearer.

Thanks (0)
avatar
By edp
18th May 2020 11:11

This is very interesting.
I am an exam marker for one of the examining bodies. Every year, for the past 15 years I have waited to be invited to mark. So far this has happened, however, there is no guarantee of this. Even if I accept a contract to mark I can withdraw at any time before or during the marking window (and will be paid for what I have done) with no consequence other than that I might not be offered a contract in the future. HMRC class my marking income as employed for PAYE purposes but self-employed for NI. Seems to me that I'm not an employee at all.
Currently this has implications for me. All my marking income has gone due to SATS and GCSE exams being cancelled. I don't qualify for self-employed grant as my exam-marking income being treated as employed means my s-e income is less than 50% of my earnings. If it is really s-e income then my total s-e income is more than 50% of my earnings. Exam bodies have been trying to get clarification from HMRC what they can do about furloughing - still waiting for that.

Thanks (2)
Replying to edp:
avatar
By johnjenkins
18th May 2020 12:11

This is probably a case where you have a "service contract" rather than a "contract for services". I have looked at a few "contract for services" and they basically say your self-employed, however if it is found that the work is to be one of employment you are liable for all costs.
The whole situation is ludicrous.

Thanks (0)
Replying to edp:
avatar
By flightdeck
18th May 2020 14:08

Just ridiculous, I doubt you could be less of an employee.

I don't understand the rationale for you being treated differently for tax and for NI? Is this common?

Thanks (0)
Replying to edp:
avatar
By l_so
09th Jun 2020 16:17

I am exactly at the same situation. I discussed with HMRC in a various occasions to see if I could be on furlough/SEISS but no one could answer me. To be honest, examiners are de facto self-employed. It is crystal clear in the contract. HMRC advisors kept on asking me why I put my income under PAYE but not s-e section. I could only say "because the law says so". They say then you are not qualified then. When I say that for the social security purpose, the law says examiners are self-employed. We do have an argument here. SEISS is definitely for the "social security purpose" and that is why our income should be viewed as self-employed. They can only er...err...errrrrr. It is not their fault. They try to help us but they cannot as PAYE should not be self-employed at all in their mind. The nature of examiners' employment status should not exist at all.

At the moment, some exam bodies could put their examiners in furlough, some give 20% of last year's earning or £250 ex-gratia payment from their own pocket, some just say no as "you are self-employed". It is really a mess.

Thanks (0)
avatar
By Mr J Andrews
18th May 2020 14:40

Several respondents have hit the nail on the head. in respect of our creaking tax system burdened by the weight of legislation imposed by successive Chancellors and their stooges. Vote pulling attempts have added thousands of pages open to interpretation whilst pompous overgrown schoolboys have tried unsuccessfully to add the joke element after one too many glasses of port.
From what I see of Mr Sunak , I believe here's a man who can undo the abuse caused by his predecessors over the last half century.

Thanks (0)
Replying to Mr J Andrews:
avatar
By johnjenkins
18th May 2020 14:42

Will he be allowed to by the civil servants?

Thanks (0)
7om
By Tom 7000
18th May 2020 14:45

been wondering about that for years ever since the 14 year old was getting paid to referee 11 year olds.....

Thanks (0)
7om
By Tom 7000
18th May 2020 14:46

.

Thanks (0)
avatar
By matthew pennifold
18th May 2020 17:51

I would like to know how many cases HMRC have lost whilst relying on their own CEST tool.

Thanks (0)
avatar
By kenatnam
19th May 2020 09:37

This smacks of HMRC being "bloody minded" and as taxpayers we should be demanding that they use our tax money wisely. At the moment it just seems like 2 Government departments slogging it out at vast expense to ourselves.

Thanks (0)