Self-employed referees secure big tribunal victory

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Drawing on his insights as an amateur football referee and tax lecturer, Mike Thexton assesses both sides of the argument in this employment status case.

The question of whether someone is an employee seems to become ever more complicated. HMRC may assess an alleged employer for tax and NIC deductions when they thought they were correctly making gross payments to a self-employed person, and cases about plumbers and cab drivers have highlighted the rights of different classes of ‘worker’ in the gig economy.

The latest FTT decision concerning football referees provides an interesting slant on this intractable problem. It’s a fascinating read for a (very junior) football referee such as myself, and also for anyone who is interested in this area of law. It describes the principles on which the decision depends – old precedents and some new ones – and applies them to a complex set of facts, before coming to a decision (the referees were right – of course!) for an interesting reason.

The facts

Professional Game Match Officials Ltd (PGMOL) is a joint venture between the English Premier League, the Football Association and the English Football League (the competitions). It organises the referees who officiate in their competitions. The elite ‘select group’, who usually appear on Match of the Day, are employees of PGMOL; but there is a second-tier ‘national group’ of about 60 officials who have been treated as self-employed.

HMRC issued regulation 80 determinations for income tax and NICs for 2014/15 and 2015/16 totalling £583,874, arguing that PGMOL should have operated PAYE in respect of the national group of referees.

It is not surprising that HMRC reckoned the national group referees were employees. They signed an agreement with PGMOL at the beginning of each season, and were subject to a number of detailed requirements on fitness, assessment, and compliance with match day procedures. They are provided with match and training kit, and suits for wearing to and from matches. However, even elite referees must supply their own boots, watches, cards and whistles. These are hardly enough to be the trappings of a business – most employees buy their own footwear.

Status tests

The leading authority for employment status disputes remains Ready Mixed Concrete (1968), in which the triple-headed test of an employment contract is set out: mutuality of obligations, control by the employer, and consistency of the other provisions of the contract with it being a contract of service. In this case Judge Falk also reviews other approaches, including consideration of whether the person is ‘in business on his own account’ or is ‘part and parcel of the organisation’.

Contractual relationship

PGMOL’s counsel contended that there was no contractual relationship between PGMOL and the referees at all – it merely organised the appointments of referees, who worked for the competitions. The judge rejected this as unsupported by the evidence.

However, it was still necessary to determine whether there was a contract of service. In fact, there were separate contracts – an overarching agreement for the season, under which appointments were made for individual matches. The payments were made for matches, and HMRC argued that the context of a continuing relationship was relevant in inferring mutuality of obligations. In short, there was an expectation that matches would be offered and the referees would accept them.

Did mutuality exit?

The tribunal did not consider that was enough for mutuality of obligation to exist. Even after a match had been offered and accepted, it was possible for the referee to withdraw, or for PGMOL to cancel the appointment. This contrasted with the situation in Weight Watchers (2012), in which leaders could only opt out of meetings for good reasons and had to try to find their own replacements – their obligation to work only ceased when a substitute had been found. If a referee withdraws from a match, PGMOL fills the gap.

No control

Most significant, though, appears to be the lack of ‘control’. The requirements imposed on the referee by the rules of the competition and the laws of the game, and the relentless assessment and evaluation that elite referees undergo, appear at first glance to constitute something like the control that a ‘master’ exercises over a ‘servant’. However, once the match begins, PGMOL have no say at all in how the referees carry out their task.

The judge cites the precedent of Sharpe v Bishop of Worcester (2015): a clergyman was held not to be employed (in a case about unfair dismissal) because he could not be told how to perform his duties. The facts predate the introduction of the Video Assistant Referee, of course, but even VAR only advises the referee to think again. The laws of the game make it clear that the referee is in control. On that basis, the contracts were not contracts of employment, and PGMOL was not liable for the deductions.

Men in black

I was surprised to find such a comparison between a clergyman (my father) and a referee (myself) in the context of a tax case. I suppose we both dress up in black on a Sunday and seek to regulate the behaviour of people in accordance with the laws of a higher authority. He rarely had to put up with shouts of ‘you don’t know what you’re doing’ – and the words of the songs sung by the ‘congregation’ tended to be a little different.

Lady Arden in the Sharpe case commented that she could not think of any other professional person who had the same independence of action as a clergyman; perhaps she does not watch football.

Wider application?

I doubt whether the precise terms of this FTT decision will apply widely. However, the relationship between the overarching agreement and the individual appointments is something that does have a wider application – it is useful to see the judge’s analysis that one does not determine the status of the other.

About Michael Thexton

Mike Thexton

Mike Thexton has been talking and writing about tax for over 30 years, as well as running a small practice and giving consultancy advice on VAT. In his spare time he referees children's football and writes books - What happened to the hippy man? about the 1986 hijacking of PA 073 in Karachi (, and the Xessus series of fantasy novels ( Mike is a member of Council of the Chartered Institute of Taxation.


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10th Sep 2018 10:40

It's the old adage. If you want a certain result you have to set your stall out in a certain way. I am a great believer in getting things right, right at the start. I always say to clients, the best way to get your tax bill down is to get it right from the start and record things at the time. That is why I think MTD (not in its present form or time scale) will benefit most business.
The main reason why employment status is challenged is because business get lazy. Set out your contract for service correctly and it will withstand any challenge.

Thanks (1)
10th Sep 2018 10:49

I expect the video assistant referee (VAR) will put an end to the lack of "control" and in future referees will be unable to make any decisions without their PGMOL overlords permission.

I also believe the influence of the "big clubs" over the referees has not been fully considered. Surely this is undue influence, too!!

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10th Sep 2018 11:26

I am somewhat perplexed by this decision and the interpretation of tests for employment/self employment.

It is possible for a ref to withdraw but it is not possible for him to arrange for someone to appear in his place so I would have thought that indicated an element of control.

I note that "once the match begins, PGMOL have no say at all in how the referees carry out their task." and on the basis of this there is no deemed control.
This argument could be extended to almost anyone. The next time HMRC suggest that a construction worker is employed I wonder if the argument that they are not told how to lay the bricks or wire the electrics will be accepted?

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to Inoff the Red
27th Sep 2018 12:08

The arguments about bricklayers was explored on Castle Construction. They were found not to be employees, and in fact self-employed.

Amusingly, HMRCs CEST tool gets the wrong answer for this case, which they freely admit to.

Another (I'm doing my Peter Cook El Wisty voice) interesting fact about the Castle Construction case was the judge commenting on the fact that if the bricklayers had been employed then they would not have earned as much money, and therefore less tax would be due than HMRC are trying to collect.

Apparently (sarcasm mode now), and HMRC aren't yet able to grasp this fanciful notion, people who freelance charge more than their permanent counterparts.

When an HMRC inspector's boiler breaks and a plumber turns up to fix it for the day, they should try paying by looking up the average annual salary for a full time plumber and offering him 1/365th for his work. Doh.

Thanks (1)
10th Sep 2018 11:56

HMRC continue their search for these ghosts they called "deemed employees". Where are all these thousands of people they claim to exist? And if there are so many of them, then why are they having so much trouble collecting tax from them?

Does Occcams razor apply here....maybe, just maybe, "deemed employment" is an invention by HMRC used to gather more tax, and that actually there aren't thousands of them at all.

Thanks (4)
to davechaplin
10th Sep 2018 12:21

Spot on Dave and it stems from Gordon Brown trying to raise money to pay for his incompetence.

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to johnjenkins
27th Sep 2018 12:02

incompetence is expensive!

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10th Sep 2018 13:02

...and a policy continued by the inept Theresa May for the same reason.
Perhaps if HMRC looked at the artificial business practices of Amazon et al who manage to create profits in low tax countries then they wouldn't need to waste time and resources chasing the little folk.

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to Inoff the Red
10th Sep 2018 14:16

One could argue that the likes of Amazon et al can have low prices cos they pay less tax which helps towards the demise of the high street.
Just watch out that your Ikea wardrobe doesn't lean too far to the right.

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11th Sep 2018 07:56

Do we (or even HMRC) need to start now trying to determine what employment status a robot (AI driven machine) will have?

The immediate angle is definitely a servant... but what if the robot is a boss... now there's a thought.

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to drakeltd
11th Sep 2018 08:15

I'm sure the EU would come up with rules for a Roboss as they did when they created a "worker".

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11th Sep 2018 09:35

We have been here before, ...many times, one day we may have a solution set in stone, until then heres to the next Employed or self employed article, (I estimate some time next month).

Thanks (1)
11th Sep 2018 09:35

We have been here before, ...many times, one day we may have a solution set in stone, until then heres to the next Employed or self employed article, (I estimate some time next month).

Thanks (0)

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