A long running tax case involving part-time referees appointed to Football League and FA Cup games is yet to be finalised after the Supreme Court dismissed an appeal, but remitted the final decision to be made by the First-tier tax tribunal, which first heard the case over six years ago in July 2018.
Five justices of the court unanimously dismissed the appeal from PGMOL, who appoint the referees, after a dispute with HM Revenue & Customs about whether the officials were employees for tax purposes.
HMRC argued that referees worked under a contract of employment from PGMOL, while the referee authority said the relationship was one of self-employment.
Lord Richards, giving the lead judgment in Commissioners for His Majesty’s Revenue and Customs v Professional Game Match Officials Ltd, said there were various obligations imposed on referees which indicated that each match appointment could be an individual contract. In the light of these findings, the court remitted the case to the First Tier Tribunal to decide whether individual contracts were contracts of employment and so should be subject to Income Tax and National Insurance deductions.
PGMOL oversees the appointment of full-time officials and those in the so-called National Group, who usually have other full-time employment. The appeal concerned the tax status of national group referees in the 2014/15 and 2015/16 seasons.
Officials in this part-time group were required to pass a fitness test and attend an introductory seminar. They operated under disciplinary rules operated by PGMOL and were appointed to weekend games on the previous Monday, only being able to pull out due to injury, illness or work commitments. An appointment created contract under which the referee agreed to officiate and PGMOL agreed to pay the appropriate fee. If the referee did not attend the match, the contract would fall away with no sanction imposed and no fee payable.
The First-Tier Tribunal had found in favour of PGMOL, holding that the contracts were not contracts of employment because of insufficient mutuality of obligations and the PGMOL having insufficient control over referees. The Upper Tribunal held that the FTT had misapplied the law on control but dismissed HMRC’s appeal, but the Court of Appeal found in favour of the tax authority.
The Supreme Court ruled that once the appointment had been made and accepted, the parties were under mutual obligations to each other.
Lord Richards said the authorities showed it was not necessary that an employer should have a contractual right to intervene in every aspect of the performance by an employee of his or her duties.
He added that the Court of Appeal was correct to say that the combination of contractual obligations imposed on referees was capable of giving PGMOL a ‘framework of control’ sufficient to meet the control test for employment purposes.
Commenting on the ruling, Dave Chaplin, chief executive of tax compliance firm IR35 Shield, said: 'The Supreme Court has now ratified the principles from the April 2022 decision by the Court of Appeal in Atholl House, bringing firms and taxpayers more certainty when making tax status decisions around IR35 and Off-payroll.
'Significantly, the Supreme Court reinforced that when an individual is paid for work done, and there is some element of control, that is merely a precondition but does not tell us the engagement status. A full multi-factorial assessment needs to be made, considering all relevant factors.
“Regrettably for PGMOL, their case now faces a fifth hearing, having been remitted back to the First-tier tax tribunal, to consider tax matters on engagements that took place ten years ago.'
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