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HMRC wins referees’ appeal but has yet to score


The Court of Appeal has kicked the ball back to the FTT to decide key issues in the long awaited case: HMRC v Professional Game Match Officials Ltd (PGMOL), concerning the employment status of football referees. 

23rd Sep 2021
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The facts were covered in my report of the UT decision: Employment Status: HMRC gets a red card, which upheld the decision of the FTT. 

HMRC has now won its appeal at the Court of Appeal, but the case is not over as the Court of Appeal has decided the lower courts interpreted the law incorrectly; they “erred in law”, so the FTT must  rehear the case.

It's complicated

The practical issue is whether PGMOL should deduct income tax and employer’s NIC from the payments it makes to referees whom it supplies to officiate at football matches.

The case rests mainly on the complicated status factor of mutuality of obligations (MOO) and whether there was an overarching contract of employment or, if not, a specific individual contract of employment each time the referee officiated at a match.

The Court did highlight the fact that there maybe differences between those decisions that dealt with overarching contracts for employment rights and that they may not apply in all cases. There is also a further complicating factor that some decisions involve tripartite relationships between employment agencies, clients and contractors, but that in PGMOL it is a direct relationship.

Unusual facts

An important finding of fact about the general picture was that National Group Referees (NGRs) were “committed, driven individuals who are passionate about football, refereeing and about their performance as referees, and who have a continual desire to improve. Also, “they were not doing it for the money”.

This is a highly unusual set of facts where the activity is a hobby and must take second place to primary work commitments. The individuals are ambitious perfectionists who make themselves available for matches and training because it may compromise their ability to perform at the highest level if they do not and would lose them the opportunity to be offered the best matches. Most of the referees thought there was no contract, let alone a contract of employment.

Mistakes in lower courts

The Court of Appeal held that the FTT and the UT both erred in their approaches to the question of mutuality of obligation in the individual contracts, and the FTT erred in law in their approach to the question of control in the individual contract. 

FTT errors

The Court of Appeal decided the FTT erred in law in its conclusion that the ability of either side to pull out before a game, without any breach or sanction, negated the necessary mutuality of obligation. The correct analysis, according to the Court of Appeal, is that if there is a contract, the fact that it permits either side to terminate the contract before it is performed is immaterial. The contract subsists, with its mutual obligations, unless and until it is terminated by one side or the other.

The FTT’s second reason for holding that the individual engagements were not contracts of employment was that there was not a sufficient framework of control. The FTT seems to have treated this as a decisive consideration, and not to have asked whether the relationship between PGMOL and the NGRs, including the terms of the overarching contract, amounted to a sufficient framework of control.

The FTT further erred in law in concluding that the coaching and assessment systems could not be relevant to the question of control.

UT errors

The UT erred in concluding that the individual contracts could not be contracts of employment if they merely provided for a worker to be paid for the work he did and, in concluding that the statements about the mutuality of obligation which is necessary to found an overarching contract, also apply to individual engagements.

The UT’s observations about the fact that both sides could pull out before the performance were also wrong in law. 

The UT wrongly assumed that a contractual obligation is only enforceable if the employer has an effective sanction in relation to it.  A contractual obligation is, by its very nature, enforceable whether or not the contract enables the employer to apply a sanction for its breach.

Appeal Court view of control

This Court considered that control can be exerted by both positive and negative sanctions and the fact that there is not an effective sanction for the breach is irrelevant. 

The Court further considered that there are many features of the relationship between PGMOL and the NGRs which could show that there was a sufficient framework of control, particularly when the terms of the overarching contract are taken into account.

The appeal court did not reach a view about the overarching contracts.

Appeal Court conclusion

It is for all those reasons that the Court of Appeal allowed HMRC’s appeal.

The Court of Appeal has referred the appeal back to the FTT for it to consider whether there was sufficient mutuality of obligation and control in the individual contracts for those contracts to be contracts of employment.

Incidentally, the Court of Appeal thought that it should be for the specialist fact-finding tribunal, not an appellate court, to make those assessments, I don’t agree.

My conclusion

This was too important an issue for the Court of Appeal not to make a judgment on. The analysis of the issues on mutuality readily point out where the FTT and the UT have erred in law but, they haven’t really given any clear indication of what is right in law.

If I have understood it correctly, the Appeal Court appears to be saying that if there is a contract, as in the individual contract where the person works and gets paid and the business is obliged to pay them, then there are mutual obligations. A single engagement can give rise to a contract of employment if work that has in fact been offered is in fact done for payment.  

The Court of Appeal have made it clear that there shouldn’t be so much reliance on mutuality of obligations and that the court should look at all the circumstances before deciding on whether it is a contract of employment.

This judgment is very much leaning in HMRC’s direction which  is unfortunate for employment status. Every contract has obligations, just by virtue of contract law and if you are looking at a tax case, then you will always be looking at the time when there is a contract and there will be mutual obligations.

I have long held the view that mutuality of obligations shouldn’t be the predominate factor used in tax cases for this very reason and because HMRC have spotted that also and made it their argument.

I do hope that this case goes all the way to the Supreme Court and that some semblance of common sense is restored. 


Rebecca Seeley Harris will be speaking at AccountingWEB Live Expo on 1-2 December 2021 alongside such guests as Rebecca Benneyworth, Peter Rayney, Paul Aplin, Anita Monteith, Carl Reader, Steve Collings, Reza Hooda plus representatives from HMRC. 

AccountingWEB Live Expo takes place on 1-2 December 2021 at Coventry Building Society Arena, Coventry. Registration is now open. A full content programme will be announced in early October enabling you to register for specific sessions. Please visit the AccountingWEB Live Expo website for full details and to sign up to our newsletter.

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Replies (3)

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By Justin Bryant
23rd Sep 2021 13:42

That's a fairly good, accurate summary of this pretty bad CoA judgment and accords with mine here:

Thanks (1)
By Paul Crowley
26th Sep 2021 17:22

It is confirmed
The courts and tribunals do not agree what the rules are.
What chance does the taxpayer have of complying with rules that are unknown?

Thanks (1)
By raycad
27th Sep 2021 12:56

I entirely agree with Rebecca's thoughts on the Court of Appeal declining to rule on this. If the CA determines that both the FTT and the UT have made errors in law then precedence dictates that the Appellate Court should determine what the law actually is and determine the appeal. That's how we come to have the vast body of Case Law to refer to.

I can't resist the obvious analogy but in a Premier League match this is the equivalent of VAR intervening and suggesting to the ref that's he goes and looks at the screen. And we all know the outcome of that: the ref invariably reverses his decision! Spineless by the CA to pass the buck on this. I agree with Rebecca that this case really needs to go the Supreme Court who I am sure would grasp the nettle and give us the required certainty.

Also, as Paul has alluded to, how could you possibly run this one through CEST? Or otherwise comply with employment tax "law"?!

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